RBS to Exit Chinese Securities Venture in $52 Million Sale

  • Guolian Securities to buy RBS’s stake in Hua Ying Securities
  • JPMorgan in December agreed to exit its Chinese joint venture

Royal Bank of Scotland Group Plc will sell its stake in a Chinese securities joint venture to Guolian Securities Co. for 354 million yuan ($52 million), becoming the latest foreign bank to leave its mainland partnership.

The Edinburgh-based bank bought the 33.3 percent of Hua Ying Securities Co. for 266.4 million yuan and will sell it at 1.2 times the audited net assets of the company in 2015, according to a Hong Kong stock exchange filing on Thursday. Guolian Securities owns the rest of the venture.

The exit comes at at time when foreign banks are seeking more control of their China securities businesses. Regulations limiting them to minority stakes have reduced their sway over key decisions and some firms have been largely excluded from lucrative businesses such as secondary-market trading in Chinese debt and equities, as well as wealth management.

JPMorgan Chase & Co. in December agreed to exit its minority-owned Chinese investment-banking venture with First Capital Securities Co. and is seeking to form a new partnership that gives it more influence. Morgan Stanley won regulatory approval to raise its stake in its China venture to the maximum 49 percent allowed under current regulations, a person familiar with the matter said in January.

Hopes for more control were buoyed last week after HSBC Holdings Plc became the first foreign bank to win permission for a majority-owned securities joint venture in China. China in November reiterated its commitment to letting overseas banks own bigger stakes in securities and fund-management joint ventures in the nation.

For RBS, exiting the Hua Ying venture comes at a time when the lender is closing branches, eliminating thousands of jobs and pushing to move some positions to cheaper locations in an attempt to reverse nine straight annual losses. The company shifted hundreds of administrative jobs at its investment bank to India last year.

Hua Ying recorded a 135.2 million-yuan profit last year, a 24 percent increase from 2015, according to Guolian Securities’s statement. The venture had 982.3 million yuan of assets in December.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE