HSBC sells 39% stake of its China securities brokerage joint venture partner

UK multinational investment bank HSBC Holdings plc has revealed plans to sell a major part of its stake in a China securities brokerage joint venture company, Reuters reported.

Qianhai Financial Holdings has 49% stake of HSBC Qianhai Securities. The state-owned company is selling 39% of its ownership of the business unit for $198 million (1.26 billion yuan).

The sale is partly motivated by the net loss of 135 million yuan (US $21.20 million) in 2021 posted by the exchange. It is also part of a larger restructuring strategy of HSBC group to exit smaller operations.


Action for the joint venture

In order to expand its banking business in the second largest economy worldwide, China, HSBC will bid for the entire 39% stake in the joint venture. The action, due to expire on 21 January, follows HSBC regulatory approval in China to take full ownership of its life insurance joint venture in the country, as it continues the expansion of its non-core banking services.

The joint venture, of which HSBC owns 51% stake, is the first foreign majority-owned brokerage in China. HSBC gained Chinese regulatory approval for the joint venture in 2017, because of rules favouring Hong Kong businesses.

Access to China

Global banks and asset management firms have been increasing their ownership in their Chinese joint ventures in the last couple of years. This is due the permission of foreign-majority ownership in some financial businesses in China in 2019.

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