Quick Take: Guolian Securities Buys Remaining 33.3% Stake in Subsidiary From RBS

Guolian Securities Co. Ltd. said in a stock exchange filing on Thursday it had agreed to purchase the remaining 33.3% stake in its subsidiary Huaying Securities Co. Ltd. from the Royal Bank of Scotland Group Plc (RBS).

The Edinburgh-based bank will sell the equity stake for 354 million yuan ($52 million), which is equivalent to 1.21 times the value of the audited net assets of Huaying Securities in 2015, according to the disclosure filed with the Hong Kong stock exchange.

RBS’s decision to leave its Chinese partner comes at a time when foreign investment banks are struggling to obtain more power over the control and decision-making processes in such joint ventures, particularly amid increasingly intense competition with local brokerages. Under current Chinese regulations, foreign investors can only hold a minority stake.

Last December, JPMorgan Chase & Co. exited its Chinese joint venture JP Morgan First Capital Securities Co. Ltd., selling its remaining 33.3% equity stake for 306.8 million yuan, a move that made the securities venture a wholly-owned subsidiary of First Capital.

But this pattern was reversed at the end of June, when HSBC Qianhai Securities Ltd. got approval from the China Securities Regulatory Commission to become China’s first majority foreign-owned brokerage. First proposed in November 2015, the joint venture will be 51% owned by London-based HSBC Bank Plc.

Some market observers said the move signaled China’s intention to further open up its financial markets to foreign investors.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)