CTBC Financial Holding Co (中信金控) yesterday said that its board of directors had approved a plan to form an 800 million yuan (US$128.8 million) joint venture with Chinese state-run companies in a bid to tap into China’s securities market.
CTBC is set to hold a 49 percent stake in what is likely be the first cross-strait joint venture aimed at establishing a full-service securities firm, the firm said at a media briefing.
The stake is likely to cost 392 million yuan in capital contribution, with the remainder of shares to be controlled by two subsidiaries run by the Fujian Provincial Government, the company said.
The new venture, which has yet to be given a name, was granted an operating license registered in the Fujian Free Trade Zone, CTBC said, adding that the license allows for future expansion beyond Fujian Province.
In contrast, the efforts of other Taiwanese brokerage companies to enter the Chinese market have been stymied by disputes over the cross-strait service trade agreement, which has yet to clear the legislature.
“The new venture is to be managed in the spirit of a 50-50 partnership between CTBC and companies in Fujian Province,” CTBC president Daniel Wu (吳一揆) said while fielding questions over the firm’s 49 percent stake in the venture.
Other Taiwanese brokerages are seeking 51 percent stakes in cross-strait joint ventures.
He added that CTBC plans to send about 10 brokerage managers to oversee the new company in Fujian.
“The number of listed companies, daily turnover and prospective retail investors in China are at least five times higher than in Taiwan,” Wu said.
The venture is expected to begin operations in the first half of next year, and would become profitable before 2019, with a formal filing to Taiwan regulators to be submitted toward the end of next month, Wu said.
“The market for brokerage services in China is anticipated to grow at an annual compound rate of 15 percent,” he said.
Full-service securities firms may provide brokerage services for China’s A-shares, operate as dealers and offer investment banking services.
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