JPMorgan Chase & Co (NYSE:JPM) is looking to offload its Chinese securities joint venture First Capital Securities Co Ltd, which would buck an industry trend of global lenders fortifying their operations in the Chinese securities space, per a Reuters report.
Many lenders have seen a duality of forces over the past year, which has involved the extant flow of personnel and resources out of labor cost-intensive locations such as London as well as a diversion of said capital into Asia. This has resulted in the bolstering of business segmentation in Asia, including Hong Kong, Singapore, and China, among others.
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JPMorgan, like other lenders, only holds minority stakes in such ventures, however these are seen as a vehicle for growth in what has been a lagging banking sector overall in 2016. Goldman Sachs, UBS AG, Morgan Stanley, Deutsche Bank, and Credit Suisse Group all have similar securities ventures with local firms, owing to the importance of the region.
First Capital is a Shenzhen-listed broker that is looking to acquire JPMorgan’s 33% of JPMorgan First Capital Securities Co. Despite the talks, there has as yet been no finalized deal and any potential purchase remains uncertain despite a filing from First Capital.
China’s securities regulatory originally approved the establishment of JPMorgan First Capital Securities Co back in 2010. The group itself is headquartered in Beijing, and offers a multitude of services such as stock and bond underwriting, as well as merger advisory. The group has also posted a net profit of $7.72 million January-June 2016, reversing a previous loss in the same period prior, according to a company filing.
According to a recently emailed statement from JPMorgan: “China is a key market for the firm globally and for many of our clients outside China. J.P. Morgan believes in the long term prospects of China and remains fully committed to our China franchise.”