JPMorgan set to boost stake in China securities venture to 71%

[HONG KONG] JPMorgan Chase & Co is poised to raise its ownership in its Chinese securities joint venture to 71 per cent, bringing it a step closer to becoming the first foreign bank to attain full ownership of a firm as the country opens its US$49 trillion financial market.

The bank has emerged as the qualified buyer of a 20 per cent stake put up for sale by Shanghai Waigaoqiao FTZ as the other existing shareholders gave up their rights to add to their holdings. The stake will be sold for 178 million yuan (S$35.5 million), according to a statement. The remaining shareholders also agreed to not transfer or dispose of their holdings without approval from the US bank, which currently controls 51 per cent, according to the statement.

After years of only allowing global banks to hold minority stakes in Chinese ventures, Beijing this year gave the green-light for Wall Street and European rivals to take full ownership in the country. With full control, the banks will be able to better set strategy and direct capital in a push into China's vast financial market.

Firms such as JPMorgan, Goldman Sachs Group and UBS Group are adding staff and office space and expanding in everything from futures and brokerages to asset management with billions in potential profits to chase in the world's most populous nation.

JPMorgan has also gained majority control of a fund management venture in the country, and will need to pay at least US$1 billion to buyout the remaining 49 per cent from its partner. Most foreign financial institutions have identified wealth management as a prime focus, with Chinese households sitting on about US$13 trillion in investable assets.

A Singapore-based spokesperson at JPMorgan declined to comment.

BLOOMBERG