JPMorgan Chase & Co is in talks to sell its stake in a Chinese investment-banking joint venture, a sign that foreign banks are getting frustrated with partnerships they cannot control.
The New York-based bank is in talks to sell its minority stake in JPMorgan First Capital Securities Co (第一創業摩根大通證券) to its local partner, First Capital Securities Co (第一創業證券), according to a statement issued by the Chinese firm yesterday.
No agreement has yet been reached, according to the statement.
JPMorgan wants to find a new partner for a venture in which it can wield greater control, said a person with knowledge of the matter who asked not to be identified.
JPMorgan set up the joint venture with First Capital in 2010 after having lagged behind rivals including Goldman Sachs Group Inc in forming tie-ups. It holds a one-third stake in the company, whose business includes equity and debt underwriting and mergers advice.
The venture posted net income of 51.7 million yuan (US$7.67 million) in the first half, compared with a loss of 23 million yuan in the same period last year. It ranks 53rd among underwriters of share sales in China this year, data compiled by Bloomberg showed. Deutsche Bank AG’s local partnership is ranked 10th, the highest among foreign-backed ventures, according to the data.
“JPMorgan believes in the long-term prospects of China and remains fully committed to our China franchise,” the bank said in an e-mailed statement confirming the announcement by First Capital. “We have a long-term strategic vision for our business in the country and continue to evaluate our options to strengthen our position in China in order to better serve our clients.”
HSBC Holdings PLC, which remained on the sidelines as JPMorgan and rivals such as Credit Suisse Group AG set up minority-owned entities, last year announced plans for a China securities partnership in which it is to hold a controlling stake.
HSBC is still waiting for regulatory approval to take a majority share in its planned partnership in the free-trade zone of Qianhai, and it is unlikely to be operational this year, the UK bank’s China chief executive officer Helen Wong (黃碧娟) said this month.
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