Goldman Sachs becomes 100% owner of JV of Chinese securities

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The Goldman Sachs logo is displayed in their office in Sydney, Australia on May 18, 2016. REUTERS / David Gray

Oct. 18 (Reuters) – Goldman Sachs (GS.N) announced on Sunday that it had received approval from the Chinese securities regulator to take full control of its securities business on the mainland.

The US bank announced that it would acquire the remainder of Goldman Sachs Gao Hua Securities Company Ltd (GSGH) and rename it Goldman Sachs (China) Securities Company Ltd.

The migration of its onshore business units to GSGH from Beijing Gao Hua Securities was underway, he added.

“This marks the start of a new chapter for our business in China after a successful 17-year joint venture,” Goldman Sachs said in a statement.

It becomes the second Wall Street company to be cleared to transition to full ownership of its securities business after JPMorgan Chase & Co (JPM.N) went 100% in August.

Securities firms in China typically house investment banking, research, equity, and fixed income activities.

Unlike most other Chinese joint ventures, Goldman had day-to-day operational control of its business, even with its minority stake.

Lucrative underwriting fees on stock and bond transactions – especially initial public offerings (IPOs) – in China’s expanding capital markets have been the driving force for Western banks to increase their stakes in their businesses on the market. continent.

Full ownership could allow foreign banks to expand their operations in China’s multibillion-dollar financial sector and better integrate them into their global operations.

Morgan Stanley (MS.N) currently owns 90% of its equity joint venture with partner Shanghai Chinafortune Co Ltd (600621.SS) after increasing its stake in May.

Chinese regulators have been considering Goldman Sach’s request to switch to full ownership since the bank signaled its intention to buy out its partner in December.

Reporting by Scott Murdoch in Hong Kong and Nikhil Kurian Nainan in Bengaluru; edited by Uttaresh.V and Stephen Coates

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