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China brokerages fall as regulator mulls letting banks compete

Monday, March 9, 2015 - 14:09
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Shares of Chinese securities firms fell after a regulator said it's considering letting banks enter the industry, raising the prospect of increased competition.

[BEIJING] Shares of Chinese securities firms fell after a regulator said it's considering letting banks enter the industry, raising the prospect of increased competition.

Citic Securities Co., the largest by market value, declined as much as 4.7 per cent in Shanghai while second-ranked Shenwan Hongyuan Group Co. slipped as much as 3.4 per cent.

That compared with a 1 per cent slide in the Shanghai Composite Index as of 11.18am local time.

Bank of Communications Co and Industrial Bank Co. would probably be among the first banks to take advantage of any opening up, China International Capital Corp said in a report today. At the same time, such a move is unlikely this year, with the government set to first allow banks to move into areas such as investment banking, CICC said.

"Brokerages will come under heavy pressure if banks are allowed to enter this area," said Luo Yi, an analyst at Huatai Securities Co in Shenzhen. "It will lead to cut-throat competition as banks control most of the financial resources."

The China Securities Regulatory Commission is studying a proposal to open up the brokerage industry to financial institutions such as banks, the regulator said in a March 6 statement on its microblog. There's no timetable on when the new policy will be announced, the regulator said.

BLOOMBERG