Goldman wins approval for full ownership of securities JV

by Jonathan Adams
Goldman Sachs

Full ownership could allow foreign banks to expand their operations in Chinese financial sector, and better integrate them with their global businesses

Goldman Sachs said on Sunday it received approval from China’s securities regulator to take full control of its mainland securities business.

The U.S. bank said it would buy the remainder of Goldman Sachs Gao Hua Securities Company Ltd (GSGH), and rename it as Goldman Sachs (China) Securities Company Ltd.

The migration of its onshore business units to GSGH from Beijing Gao Hua Securities was underway, it added.

This marks the start of a new chapter for our China business following a successful 17-year joint venture, Goldman Sachs said in a statement.

The move gives the firm free rein to pursue a clearer growth strategy that includes doubling its workforce in China to 600 and ramping up in asset and wealth management. The U.S. bank has already added 116 staff onshore this year, boosting the total to more than 400, a spokesman said.

It becomes the second Wall Street firm to be granted approval to shift to full ownership of its securities business after JPMorgan Chase & Co moved to 100% in August.

Securities businesses in China typically house investment banking, research, equities and fixed income businesses.

Unlike most of the other China JVs, Goldman had day-to-day operational control of its business even with its minority ownership.

Lucrative underwriting fees on equity and bond transactions – especially initial public offerings (IPOs) – in China’s expanding capital markets has been the driving force for Western banks to increase stakes in their mainland business.

Full ownership could allow foreign banks to expand their operations in the multi-trillion-dollar Chinese financial sector, and better integrate them with their global businesses.

Morgan Stanley currently owns 90% of its securities joint venture with partner Shanghai Chinafortune Co Ltd after increasing its stake in May.

China’s regulators had examined Goldman Sach’s application to move to full ownership since the bank flagged its intention to buy out its partner in December.



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