Citigroup Inc, which is dissolving its investment-banking joint venture in China, is planning to set up a wholly owned securities business in the world’s second-largest capital market, people with knowledge of the matter said.
The New York-based bank might initially focus on brokerage and futures trading, while expanding its custodian services in China, the people said, asking not to be identified because a final decision has yet to be made.
It plans to apply for a futures license as early as the first half of next year, the people said.
A late entrant into China’s securities market, Citigroup is among the first global banks planning to take advantage of China’s decision to allow full foreign ownership of financial services companies in the country.
The China Securities Regulatory Commission last week said that overseas institutions could apply for total control starting next year.
Rivals JPMorgan Chase & Co and Goldman Sachs Group Inc also are seeking full ownership of their securities ventures in China.
Citigroup’s new securities operation could opt against establishing an investment-banking unit in China initially, deterred by the high costs of hiring at least 35 people on the ground under the current requirements, the people said.
Goldman and UBS Group AG, which are active in the space through their local joint ventures, have faced challenges.
Goldman’s venture in China reported a 64 percent slump in investment-banking fees last year, while UBS’s mainland investment-banking revenue dropped 48 percent.
“Citi continues to evaluate opportunities to further support its clients in China,” the bank said in an e-mailed statement.
A spokesman declined to give additional details.
Since China permitted majority control of financial services firms last year, UBS, Nomura Holdings Inc and JPMorgan have gained control of local securities joint ventures.
Goldman Sachs, Morgan Stanley and DBS Group Holdings Ltd have applied to follow suit.
Nomura is on track to have more than 100 employees in its Chinese securities venture when it starts operations in December, focusing on wealth management and institutional brokerage.
Instead of offering onshore investment-banking services, Citigroup would focus on helping local clients raise capital and make acquisitions overseas, mainly through its Hong Kong hub, the people said.
Citigroup already has a custody business for overseas entities, and would need a separate license to offer the service to onshore investors.
Last year, Citigroup decided to exit a securities joint venture with Orient Securities Co (東方證券), in which it had a 33 percent stake, to set up a business in which it could have majority control and push into equities and fixed-income trading.
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