Goldman Sachs Seeking Control of Chinese JV

In the application submitted to regulators, Goldman said it would absorb the securities sales, trading and research operations currently sit in the business of its partner in the joint venture.

Goldman Sachs has applied to Chinese regulators for approval to gain majority control of the firm’s investment banking joint venture in China, as part of a plan to eventually gain full control of its China business.

A spokesman at the bank confirmed to Reuters that Goldman applied to the China Securities Regulatory Commission to increase its stakes in Goldman Sachs Gao Hua Securities to the maximum 51 percent, up from the current 33 percent.

The other shareholder in the joint venture, which focuses on equity and debt capital markets and mergers advisory, is Beijing Gao Hua Securities, controlled by Chinese banker Fang Fenglei and Legend Holdings.

Until recently, foreign banks weren’t allowed to hold a majority stake in a joint venture in China. If approved, Goldman would join HSBC, J.P. Morgan, Nomura and UBS in owning controlling stakes in their onshore joint ventures in the country. Morgan Stanley and Credit Suisse are currently awaiting approval for majority control.

China in recent years has indicated its desire to speed up the liberalization of its $44-trillion financial sector. In 2018, the country’s banking regulator removed the limits on foreign ownership of Chinese lenders and bad debt managers.

In May, China Banking and Insurance Regulatory Commission announced plans to eliminate single shareholder limits for local banks, and allow foreign financial firms to buy shares in foreign insurers in China, among other measures.

In July, Premier Li Keqiang said the country would lift the financial sector foreign ownership cap one year ahead of schedule and allow majority stakes in insurance and securities and commodities futures businesses .