SocGen to Set Up Fully Controlled China Brokerage
SocGen to Set Up Fully Controlled China Brokerage
(Bloomberg) -- Societe Generale SA is considering a fully-owned brokerage in China, joining a rush by the world’s biggest banks as the country speeds up the liberalization of ownership restrictions in the financial sector.
The French lender’s previous plans for China included investing 1 billion yuan ($142 million) to obtain a 51%-owned local brokerage, but SocGen is becoming more ambitious as it seeks growth abroad and retrenches in a sluggish European market. The bank said it’s “studying the conditions to set up a security entity in China” late next year, a move that would see it build the business itself rather than buy a local firm.
“Societe Generale is committed to entering the Chinese securities market,” the French lender said in a statement on Monday. “We see opportunity to bring in our expertise in risk management through a diverse range of investment instruments.” The bank’s statement came after Bloomberg reported earlier that it was weighing the move to set up a firm.
Overseas institutions can apply for total control of their onshore ventures from next year, China’s securities regulator said last month. After waiting for that step for decades -- and despite trade tensions between China and the U.S. -- Wall Street is moving in: Citigroup Inc. and Goldman Sachs Group Inc. are among those seeking fully-owned local brokerages.
SocGen is already in the midst of a cost-reduction plan. Since 2017, it’s targeted the French retail business as well as its investment bank for cuts after missing financial targets.
More cost cuts at SocGen haven’t been ruled out given the likelihood that negative interest rates in Europe will last, according to a person familiar with the bank’s strategy. One option is to shrink the bank’s footprint on the continent further, the person said.
Former Deputy Chief Executive Officer Didier Valet told China’s Economic Observer last year that SocGen sought five licenses, including securities trading, and was looking for partners for a Shanghai-based venture, depending on how the regulatory picture evolved.
Futures traders can apply for full foreign ownership from Jan. 1, fund managers can apply from April 1, and the securities industry will be able to file for 100% stakes on Dec. 1.
Citigroup, which is dissolving its investment-banking joint venture in China, may initially focus on brokerage and futures trading while expanding its custodian services, people familiar with the bank’s plans told Bloomberg News last month.
--With assistance from Geraldine Amiel and Evelyn Yu.
To contact Bloomberg News staff for this story: Haze Fan in Beijing at hfan40@bloomberg.net
To contact the editors responsible for this story: Jun Luo at jluo6@bloomberg.net, ;Emma O'Brien at eobrien6@bloomberg.net, Dale Crofts, Keith Campbell
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