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JP Morgan Eyes China Securities Business Market; Applies For Majority Stake Venture

JP Morgan Eyes China Securities Business Market; Applies For Majority Stake Venture
The recently relaxed ownership norms in China has driven JPMorgan Chase & Co to apply for a permission with the Chinese securities regulator for starting of a securities business in the country with ownership of a majority stake in the new business remaining with the U.S. bank.
JPMorgan said in a statement that it plans to expand and grow their businesses which would be helped if the bank is able to secure more Chinese clients on the mainland by its corporate and investment banking divisions. The bank hopes to own at least 51 per cent stake in the new venture.
The bank also announced that it has hired banking veteran Mark Leung as its chief executive for its new China business in an effort by the bank to at least cater to double the research coverage of China-listed companies throughout all business sectors, the U.S. bank also said.
JP Morgan had sold out a 33 per cent stake in a similar venture in 2016 ion China to its local partner and this effort by the bank to apply again to get permission to start a new business is a way for the bank to come back to the securities business in China.
There was no disclosure made by JP Morgan about the ownership of the remaining 49 per cent of the new venture. However, the bank wants to increase it ownership to 100 per cent if it was eventually allowed to so.
The limit of foreign ownership in the areas of securities, fund management and futures firms were announced to be raised to 51 per cent by the Chinese authorities in April this year. There have been recent complaints by the United States and other trading partners about the unfair limits on competition in China which formed the backdr4op of the announcement.
“These developments are important for China, the U.S. and global commerce, and an encouraging sign for the world’s two largest economies,” JPMorgan Chief Executive Jamie Dimon said in the statement.
Earlier, Western foreign firms could only own up to 49 per cent of a Chinese securities joint venture. As a result, western firms have been frustrated for long because of the limited contribution to revenue and the lack of control.
There are other foreign banks like JPMorgan that have created measures to set up ventures where they are the majority stake holders and those include banks like Nomura Holdings Inc and UBS Group AG. These banks generally are engaged in the business of providing broking and underwriting services.
There are also attempts by JPMorgan to increase their ownership to 51 per cent in their Chinese joint ventures with respect to its asset and wealth management business but is dependent on the agreement that the company manages to secure with the joint venture partner and the relevant authorities.

Christopher J. Mitchell

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