On Wednesday, HSBC (HSBA.L) announced that it has boosted its position in its China securities brokerage by purchasing equity from its state-owned partner Qianhai Financial Holdings.
The transaction increased HSBC’s ownership in HSBC Qianhai Securities from 51 percent to 90 percent, according to the London-based bank. The financial terms of the deal were not disclosed by HSBC.
According to Reuters, Qianhai Financial Holdings was selling the majority of its equity stake in the Shenzhen-based business in January, and HSBC was expected to make a bid.
According to a filing from Shenzhen United Property and Equity Exchange, state-owned Qianhai Financial Holding, which controls 49 percent of HSBC Qianhai Securities, is auctioning 39 percent ownership of the unit for 1.26 billion yuan ($198 million).
Asia-focused According to the source, HSBC, which received the regulatory license for the joint venture in China in 2017, would bid for the entire 39 percent ownership in order to develop in the world’s second-largest economy.
HSBC, which holds a 51 percent share in the joint venture, did not respond to a request for comment.
According to the exchange filing, the auction will end on January 21. According to the report, the joint venture lost 135 million yuan ($21.20 million) in 2021.
Due to restrictions that favor Hong Kong enterprises, the joint venture is the first foreign majority-owned brokerage in China.
The auction takes place just over a week after the bank got regulatory authority in China to fully acquire its life insurance joint venture.
Since China first allowed foreign-majority ownership in select financial enterprises in 2019, global banks and asset managers have been increasing their shares in Chinese joint ventures.
Morgan Stanley (MS.N) is also planning to boost its interest in its Chinese brokerage joint venture from 4.06 percent to 94 percent, according to a December market filing, putting it on track to gain full ownership of the company.