FILE PHOTO: People pass a sign from the Industrial and Commercial Bank of China (ICBC) at the site of the second China International Import Expo (CIIE) in Shanghai, China on October 31, 2019. REUTERS / Stringer
SHANGHAI (Reuters) – China’s securities regulator plans to grant investment banking licenses to commercial lenders as part of efforts to raise industry giants in the face of fiercer foreign competition, business magazine Caixin reported.
A pilot plan could involve at least two of China’s largest banks that get the green light from the China Securities Regulatory Commission (CSRC) to conduct investment banking business on the mainland, according to Caixin.
The Industrial and Commercial Bank of China (601398.SS) (1398.HK), the country’s leading lender, submitted a plan to CSRC in late 2018 to establish a securities unit with a registered capital of 100 billion yuan, Caixin reported.
In contrast, Chinese brokerage giant Citic Securities (600030.SS) has a registered capital of 13 billion yuan.
ICBC declined to comment. CSRC did not return an email request for comment.
According to Caixin, regulators’ desire to break the wall between commercial banking and investment banking was fueled by increasing competition from foreign players.
China removed foreign ownership limits on the brokerage business earlier this year as part of efforts to fully open its $ 40 billion financial industry. Global investment banks, including Morgan Stanley, Goldman Sachs and Credit Suisse, have obtained regulatory approval for majority stakes in their Chinese companies.
Investment banking is currently banned for most Chinese banks, although the Bank of China and the China Development Bank control land brokerage businesses under special agreements by the government.
Additionally, many Chinese banks, including ICBC, China Construction Bank (CCB) and Bank of Communications (BoCom), operate investment banking through their Hong Kong subsidiaries.
Reports by Samuel Shen, Leng Cheng and Emily Chow; Editing by Simon Cameron-Moore
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