Citigroup to ramp up Chinese investment banking plan - Hindustan Times
close_game
close_game

Citigroup to ramp up Chinese investment banking plan

Reuters |
Apr 19, 2021 09:32 PM IST

The move comes after the US bank revealed last week it would sell its retail banking assets in 13 markets, including mainland China and India.

Citigroup plans to expand its investment banking business in China and will soon apply to set up local underwriting, sales and trading and futures trading businesses by the end of June, a person with direct knowledge of the matter told Reuters.

Citigroup announced on April 15, 2021, it will exit 13 international consumer banking markets, including China and India.(AFP)
Citigroup announced on April 15, 2021, it will exit 13 international consumer banking markets, including China and India.(AFP)

The move comes after the US bank revealed last week it would sell its retail banking assets in 13 markets, including mainland China.

Hindustan Times - your fastest source for breaking news! Read now.

Citigroup's applications to regulators are being finalised and should be officially lodged shortly, the source said.

The expanded investment banking unit could employ about 100 people, consisting of existing employees and new hires, by the time it is operational, the person added.

When contacted, a Citigroup spokesman declined to comment.

Citigroup's move reflects "the broad trend of China's opening up, and local brokerages are fully prepared for the foreign competition," said Zhu Feifei, analyst at Huafu Securities Co.

Zhu said that China represented a huge potential market for foreign players, but it would take time for them to win market share.

A local underwriting licence would allow Citigroup to participate in the fast-growing mainland Chinese IPO market, especially the STAR Board, which is dominated by local institutions.

There were $8.9 billion worth of IPOs on the main Shanghai Stock Exchange board, STAR Market and Shenzhen ChiNext in the first quarter of 2021, according to Refinitiv data.

Regulatory rules require lead underwriters for STAR IPOs to buy 2% to 5% of stock on sale and hold it for two years. This requirement has discouraged foreign institutions, as it ties up capital, leaving the market to be dominated by major Chinese banks.

Citigroup sold its stake in its Chinese joint venture with Orient Securities in 2019, paving the way for the U.S. bank to launch its own investment bank, as China opened up its brokerage sector.

The bank was given a domestic custody licence last year and already has licences to settle and underwrite bonds in mainland China.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away!- Login Now!
Stay informed on Business News along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, March 28, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On