June 1, 2011

Citigroup to Form Securities Venture in China

Joint agreement with Oriental Securities to happen this month

Citigroup plans to sign a joint venture agreement to launch a securities firm in China in June, it was reported on Wednesday, as it seeks to insert itself into the thriving capital market atmosphere there.

Reuters reported that a Securities Times piece revealed the deal, saying that Citi would partner with domestic Chinese firm Oriental Securities Co. after six months of talks. Originally, Citi had planned to launch its venture in tandem with Central China Securities, but that arrangement did not come to fruition and Oriental Securities stepped into the gap, according to unnamed sources in the report.

In February, local media in China had reported that Citi and Oriental Securities had engaged in talks and after six months of negotiations had agreed on an initial plan for their joint venture.

As reported on Tuesday by AdvisorOne, the Royal Bank of Scotland late Monday announced its own joint venture with Guolian Securities in the formation of a brokerage firm, Huaying Securities, and Founder Securities, Chinese joint venture partner of Credit Suisse, also received approval late in the day for its own IPO. JPMorgan and Morgan Stanley had also received approval in January to underwrite Chinese stocks and bonds.

China is a hot market, having become the largest IPO market in the world in 2010 after investors bought into deals totaling $70 billion. Some time in 2011, China plans to launch an international board to accommodate such foreign companies as HSBC Holdings to float on the Chinese domestic market for the first time.

Foreign firms are eager for exposure to Chinese investors, with more and more companies listing themselves on the Hong Kong exchange and more joint ventures being inked. Seven foreign banks, including UBS, Goldman Sachs and Deutsch Bank, have already established Chinese securities ventures.

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