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November 2, 2020updated 05 Nov 2020 10:08am

JPMorgan increases ownership in China securities JV to 71%

JPMorgan has raised its stake in its China securities joint venture (JV) to 71% from 51%, thereby becoming the foreign bank with the highest ownership interest in such a venture.

A stock exchange filing revealed that the bank raised the ownership by acquiring a 20% holding from Shanghai Waigaoqiao FTZ for CNY177.7m ($26.6m).

The plan to raise the stake in the JV, which reported a loss of CNY85.9m in 2019, was first announced in September this year.

At that time, it was also said that JPMorgan emerged as the only eligible buyer for the stake as other shareholders relinquished their rights for the acquisition.

Among a total of 98 firms, Securities Association of China ranked the Shanghai-based JV last in terms of assets and revenue last year.

The development is the result of China’s liberalisation plan to boost competition by opening up the financial services sector to foreign players.

JPMorgan’s China moves

In December last year, JPMorgan received the final regulatory nod to launch its majority-owned securities JV in China.

In June 2020, the bank also secured the go-ahead to operate the first entirely foreign-owned futures business in China.

The bank also agreed to buy out its Chinese partner’s stake to assume sole control of its China mutual fund JV, China International Fund Management.

Other firm’s China plans

Several US firms have been looking to tap China’s financial $50trn financial services industry even as tensions continue between the two countries.

In August this year, BlackRock obtained the regulatory clearance to launch mutual fund unit in China.

China recently also gave the approval to the wealth management JV between BlackRock, Temasek and China Construction Bank.

Earlier this year, Credit Suisse acquired a majority stake in its China securities JV.

In 2018, UBS became the first foreign bank to take a controlling stake in a China business under new rules.

 

 

 

 

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