China Grants Approval for Goldman Sachs, Morgan Stanley to Control Securities Units
March 27 2020 - 10:44AM
Dow Jones News
By Jing Yang
China has cleared Goldman Sachs Group and Morgan Stanley to take
majority control of their local securities businesses, taking a key
step in opening up its financial markets to Wall Street.
The China Securities Regulatory Commission will allow the two
banks to move to 51% ownership of their local joint ventures,
Goldman Sachs Gao Hua Securities Co. and Morgan Stanley Huaxin
Securities Co., the two U.S. institutions said on Friday. Both had
initially lodged applications around August last year.
Goldman Sachs is injecting new capital to increase its stake in
its joint venture from 33%. It said it would move as soon as
possible to migrate some business units that operate under its
local partner, Beijing Gao Hua Securities, into the joint venture.
Morgan Stanley will increase its stake in its Shanghai-based
venture from 49%.
American financial firms, including investment banks, money
managers and credit-card firms, have been trying to pry open
China's markets for decades, and restrictions on their activity
have been a focal point in President Trump's trade war with
China.
The governments of the world's two biggest economies reached a
trade deal in January that included awarding U.S. financial
institutions better access to the Chinese market.
China increased the shareholding cap on local securities joint
ventures to 51% in 2018, and UBS Group AG of Switzerland
subsequently became the first foreign bank permitted to take
majority control. Beijing later said it would remove ownership caps
completely and allow 100% holdings as of this April.
Goldman Sachs said it would now seek full ownership of its unit
"at the earliest opportunity."
The approvals came just as China resurfaced from a nearly
two-month nationwide lockdown to contain the spread of the new
coronavirus. The U.S. and Chinese governments have traded barbs
over the virus, but in the past day Mr. Trump and his counterpart,
Xi Jinping, held a phone call, which the U.S. president described
as a "very good conversation."
JPMorgan Chase & Co. in December received approval to set up
a new 51%-owned securities joint venture in China.
Write to Jing Yang at Jing.Yang@wsj.com
(END) Dow Jones Newswires
March 27, 2020 10:29 ET (14:29 GMT)
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