China may allow Wall Street banks run own mainland units

Pedestrians walk down Wall Street in New York, U.S. Thursday, April 22nd 2010. Bloomberg.

China may give Wall Street firms long-sought permission to run their own investment-banking arms on the mainland, the Wall Street Journal reported, citing unidentified people briefed on the talks.

Officials in Beijing are considering the move amid discussions for a new trade and investment framework with the U.S., the newspaper said. Under existing rules, U.S. firms offer services to companies on the mainland by taking minority stakes in joint ventures with China’s domestic brokerages.

Such arrangements have long frustrated some of the world’s biggest banks, which have struggled to challenge local players in China while relinquishing control of key decisions, as well as a share of profits. JPMorgan Chase & Co., the largest U.S. bank, said last month it’s in talks to sell a stake in a partnership, JPMorgan First Capital Securities, potentially freeing itself to get more control through a new venture.

People briefed on China’s deliberations cautioned that talks are continuing and that details would need to be worked out with regulators, the Wall Street Journal said. An agreement also would need to be ratified by the U.S. Senate, the paper said.

Small Share

Firms including Goldman Sachs Group Inc. and UBS Group AG also established Chinese joint ventures more than a decade ago. But most foreign-backed joint ventures remain minnows in China.

JPMorgan First Capital ranked 120th out of China’s 125 securities firms by net income in 2015, according to the Securities Association of China. UBS Securities Co. whose 296 million yuan ($44 million) profit was the biggest among foreign-backed joint ventures, came in at 95th place.

JPMorgan’s local partner, First Capital Securities Co., has said it’s held talks to buy the U.S. firm’s stake. The joint venture generated 156 million yuan of revenue in the first half.

JPMorgan has weighed options including forming a new joint venture under a framework established in the Shanghai Free Trade Zone, people familiar with the matter said last month. That framework opens the door for overseas banks to achieve greater control of local ventures and pick partners that aren’t in the securities business, they said. Even so, the rules have yet to be finalized, the people said.

Bloomberg

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.