China is planning to provide commercial banks with securities licenses in a bid to create «aircraft carrier-sized» investment banks for the domestic market.
At least two major commercial banks are expected to receive the new license as initial pilots, according to a «Caixin» report citing unnamed sources.
The banks will initially focus purely on investment banking activities rather than the full range of securities service across brokerage proprietary, underwriting and sponsorship, margin financing and securities lending.
Foreign Competition
The China Securities and Regulatory Commission has traditionally kept the vast majority of domestic lenders out of the securities business though many have offerings overseas commonly through their Hong Kong-based subsidiaries.
The current move signals a potential policy shift that sources claim are driven by «fierce competition» from foreign banks that will be responded to via the creation of «aircraft carrier-sized» investment banks.
Since 2018, investment banking giants including UBS, Goldman Sachs, Morgan Stanley and Credit Suisse have been approved to become majority owners in their mainland securities joint ventures. Last year, J.P. Morgan and Nomura also received regulatory approval to set up securities joint ventures on the mainland with majority ownership.
