Citigroup to expand investment banking biz in China

Photographer: Chris Ratcliffe/Bloomberg

Citigroup plans to expand its investment banking business in China and will soon apply to set up local underwriting, sales and trading and futures trading businesses by the end of June, a person with direct knowledge of the matter told Reuters.

The move comes after the U.S. bank revealed last week it would sell its retail banking assets in 13 markets, including mainland China.

Citigroup‘s applications to regulators are being finalised and should be officially lodged shortly, the source said.

The expanded investment banking unit could employ about 100 people, consisting of existing employees and new hires, by the time it is operational, the person added.

When contacted, a Citigroup spokesman declined to comment.

Citigroup‘s move reflects “the broad trend of China’s opening up, and local brokerages are fully prepared for the foreign competition,” said Zhu Feifei, analyst at Huafu Securities Co.

Zhu said that China represented a huge potential market for foreign players, but it would take time for them to win market share.

A local underwriting licence would allow Citigroup to participate in the fast-growing mainland Chinese IPO market, especially the STAR Board, which is dominated by local institutions.

There were $8.9 billion worth of IPOs on the main Shanghai Stock Exchange board, STAR Market and Shenzhen ChiNext in the first quarter of 2021, according to Refinitiv data.

Regulatory rules require lead underwriters for STAR IPOs to buy 2% to 5% of stock on sale and hold it for two years. This requirement has discouraged foreign institutions, as it ties up capital, leaving the market to be dominated by major Chinese banks.

Citigroup sold its stake in its Chinese joint venture with Orient Securities in 2019, paving the way for the U.S. bank to launch its own investment bank, as China opened up its brokerage sector.

The bank was given a domestic custody licence last year and already has licences to settle and underwrite bonds in mainland China. (Additional reporting by Samuel Shen in Shanghai; Editing by Jacqueline Wong

Reuters

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.