The bank assumes effective ownership of the Qianhai Securities joint venture.
HSBC now owns a clear majority of its securities brokerage with Qianhai Financial after it previously held a little more than half of the business, an announcement by the bank indicated yesterday.
Its ownership increased to 90 percent after buying a 39 percent share from Qianhai, which intends to keep a 10 percent interest in the entity. HSBC originally received approval to create the majority-owned venture from the China Securities Regulatory Commission (CSRC) in 2017 under a special set of rules for Hong Kong-funded financial institutions, whereby a 51 percent stake was the maximum permissible then.
HSBC indicated that the Qianhai business, which is located in Shenzhen, is its main conduit for investment banking and securities activities in China and that the step reflected both partners' «strong confidence» in the business.
Progressive Relaxation
China has been progressively relaxing financial sector foreign ownership restrictions in recent years. Banks could only hold minority stakes in domestic joint ventures until 2018, when the allowable ownership limit was increased to 51 percent.
After that, rules ceding majority control to foreign institutions was implemented earlier than originally envisioned in 2020 as part of the first phase trade deal between China and the U.S.
Swiss Banks also Upping Stakes
As a result, both Credit Suisse and UBS have successively increased their ownership of their securities firms in China. Credit Suisse indicated that it had become a majority shareholder of its securities joint venture in June 2020, with UBS indicating it would also seek fuller ownership of its onshore joint venture in 2019, as finews.asia previously reported.
Note: a UBS spokesperson in Zurich subsequently confirmed that UBS's ownership in its onshore securities joint venture had since risen to 67 percent.
