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Credit Suisse to raise stake to 51% in Chinese joint venture

Swiss bank joins race to establish majority-controlled presence in China

Credit Suisse's securities joint venture in China provides services including sponsoring and underwriting company shares and bonds.   © Reuters

NEW YORK -- Credit Suisse intends to take a controlling 51% share in its Chinese securities joint venture, the Swiss investment bank said Monday, as foreign financial institutions embrace Beijing's moves to open the market.

The bank, which owns 33% of Beijing-based Credit Suisse Founder Securities, reached an agreement with Chinese partner Founder Securities to increase its stake by way of capital injection, the Swiss company said in an announcement.

The transaction, while still pending regulatory approvals, could make Credit Suisse one of the first overseas financial institutions to have a majority-controlled operation in China. Beijing first announced in late 2017 that it would let foreign financial groups own up to 51% in a local joint venture.

Credit Suisse's move follows that of compatriot and rival UBS, which became the first foreign player to take majority control of a Chinese joint venture in December. JPMorgan Chase and Nomura Holdings also received regulatory approvals last month to set up majority-controlled securities operations in China but have not announced specific plans. Currently, neither has such joint ventures in the country.

The regulatory approvals also come against the backdrop of the Sino-American trade war, with Washington accusing Beijing of limiting market access for foreign investors and businesses.

Morgan Stanley, eager to jump on the China bandwagon, last month won a bid to acquire an additional 5.5% stake in one of its joint ventures, Morgan Stanley Huaxin Fund Management. The acquisition will make the Wall Street giant the largest shareholder of the Shenzhen-based asset management firm, with a 42.9% stake.

Morgan Stanley has told China's official news agency Xinhua that it also intends to take majority control of its securities joint venture with Huaxin.

The Chinese joint venture Credit Suisse Founder Securities, formed in 2008, provides services including sponsoring and underwriting company shares and bonds. The Swiss banking giant also has an asset management joint venture in China, ICBC Credit Suisse Asset Management.

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