Citi Setting Up Wholly Owned Securities Unit in China
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Citigroup, which earlier announced its decision to dissolve its investment-banking joint venture in China, is now setting up a wholly-owned securities business in the world’s second-largest economy.
The New York-based bank may initially focus on brokerage and futures trading while expanding its custodian services in China, quoting sources familiar with the matter. This comes as China announced the removal of ownership caps for financial institutions.
The people asked not to be identified because a final decision has yet to be made. It also plans to apply for a futures license as early as the first half of 2020.
Earlier this year, Citigroup has agreed to sell its stake in its Citi Orient Securities joint venture to its Chinese partner, as it prepares to set up its own brokerage in the world’s second-largest capital market.
In December, Citigroup Global Markets Asia informed Orient Securities that the bank intended to sell all of its shareholdings, the Chinese company said in an exchange filing. Orient said its board gave the green light for the acquisition of Citi’s stake, adding that the deal will be subject to approval from China’s securities regulator and state asset regulator.
Questions & Answers
Q.What kind of financial services will Citigroup initially offer through its new wholly-owned unit in China?
What kind of financial services will Citigroup initially offer through its new wholly-owned unit in China?
Citigroup may initially focus on brokerage and futures trading services. It also plans to expand its custodian services within China, according to sources familiar with the matter.
Q.Why is Citigroup establishing its own securities business in China now, after dissolving its joint venture?
Why is Citigroup establishing its own securities business in China now, after dissolving its joint venture?
This move follows China's announcement to remove ownership caps for financial institutions. Citigroup is selling its stake in its previous joint venture to prepare for setting up its own brokerage.
Q.When did Citigroup indicate its intention to sell its stake in the Citi Orient Securities joint venture?
When did Citigroup indicate its intention to sell its stake in the Citi Orient Securities joint venture?
Citigroup Global Markets Asia informed Orient Securities of its intention to sell all its shareholdings in December. Orient Securities' board has approved acquiring Citi's stake.
Q.What regulatory steps are still needed for Orient Securities to acquire Citi's stake in the joint venture?
What regulatory steps are still needed for Orient Securities to acquire Citi's stake in the joint venture?
The deal for Orient Securities to acquire Citi's stake is still subject to approval. It requires consent from both China's securities regulator and the state asset regulator.
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