International

China Promises To Grant More Foreign Bank Licenses

China to Grant More Banks Global Licenses

More approvals are coming in China for global banks looking for majority ownership in their local securities ventures, according to a top Chinese regulator.

Bloomberg reported that China has promised to let foreign banks have more access to its financial sector, which is worth about $40 trillion. Fang Xinghai, the vice chairman of the China Securities Regulatory Commission (CSRC), said that in the next six months, more licenses will be granted.

“We do have a few companies in the process of applying for 51 percent,” he said.

In December, UBS Group AG was the first foreign entity to be granted approval for a majority stake in a local venture. President Xi Jinping said China is “steadily widening the opening-up” of the industry. JPMorgan and Nomura Holdings have also applied.

Xinghai told Bloomberg that the part of the process that takes a long time is that a foreign shareholder has to buy the stake from a local collaborator. The regulator, for their part, can get a company “very swift” approval.

The CSRC takes care of applications for foreign majority stakes in securities and assets handling. It also handles China’s capital markets, an area where China wants more non-Chinese participation.

Fang also said that the Shanghai-London Stock Connect program, which would allow for cross-border stock listings, has been delayed due to Brexit. It was supposed to debut on Dec. 14, but there has been no official word about it.

“You have to ask the British government,” said Fang, adding that China is committed to creating a stronger connection between London and Shanghai. “They have to get their vision right.”

China has also been busy with companies going public. There were 33 initial public offerings (IPOs) for Chinese companies listed on the New York Stock Exchange (NYSE) and Nasdaq in 2018, the most since 2010, when there were 39, according to reports.

The companies included iQiyi, a video platform company, and NIO, an electric car maker, as well as Tencent Music Entertainment Group.

“The level of new issuance of Chinese companies in the U.S. is unusual given the escalating trade tensions and weakness in the Chinese markets,” said Daniel Delany, managing director at CIBC Private Wealth Management. “That said, longer-term, Chinese companies have benefited from U.S. listings, with the validation of more institutional shareholders and higher valuations.”

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