Citic Securities and CSC Financial, China’s two largest brokerage houses, could potentially merge to become a heavyweight investment bank in anticipation of new foreign entrants.
The two brokers and their holding companies, Citic Group and Central Hujin Investment, respectively, are in discussions on the feasibility of a deal, according to a «Bloomberg» report citing unnamed sources, though no conclusive decisions have been made. The China Securities Regulatory Commission (CSRC) and the state-owned Asset Supervision and Administration Commission were also involved in the discussions, the report added.
If the two do go through with the merger, it would create an investment banking giant with a market capitalization of $67 billion.
«Aircraft Carrier-Sized»
Last year, the CSRC announced its ambitions to create an «aircraft carrier-sized» investment bank to support mergers, enhance capital strength, expand services and promote internationalization. Concurrently, China is opening up its $45 trillion financial services industry for foreign participants with new competitors like UBS, J.P. Morgan, Nomura and more.
According to a Goldman Sachs estimate, further market reforms on derivatives and more institutional access to stocks and bonds could triple market revenue in China to $116 billion by 2026.
