American investment banks Goldman Sachs and Morgan Stanley have secured the clearance of the China Securities Regulatory Commission for taking majority stake in their China securities joint ventures (JVs).
Beijing has been increasingly opening its borders to outside businesses. The approvals arrive as the country is trying to protect its economy during the coronavirus crisis.
Goldman has raised its stakes in Goldman Sachs Gao Hua Securities from 33% to 51%, while Morgan Stanley has boosted its ownership in Morgan Stanley Huaxin Securities from 49% to 51%. Having a majority stake of the ventures will enable the banks to increase its presence in China and achieve better alignment with their other global businesses.
We will be seeking to move towards 100% ownership at the earliest opportunity"
Goldman Sachs APAC ex-Japan co-president Todd Leland said: "This is a significant milestone in the evolution of our business in China.
"We will be seeking to move towards 100% ownership at the earliest opportunity."
Morgan Stanley set up its mainland China presence in 1994.
It has offices in Beijing, Shanghai, Hangzhou, Shenzhen, Zhuhai, along with a regional office in Hong Kong.
Morgan Stanley Asia-Pacific co-CEO and CEO China Wei Sun Christianson said: "China is a core strategic focus for the Firm and a market in which we and many of our clients see significant opportunities.
"We are proud of our long history and track record in China and look forward to further investment in Morgan Stanley Huaxin Securities to provide the best advice and services to clients."
In 2018, China upped the cap on foreigners owning a securities operation to 51%. Before that, foreign banks were only allowed minority stakes.
Swiss major UBS Group AG was the first foreign bank to get approval of majority stake in the China securities business under the new rules, while Japanese brokerage house Nomura Holdings and JPMorgan JPM got approval last year.
Additionally, JPMorgan intends to get approval for full ownership of all mainland China operations by next year. Another major global bank, Credit Suisse is still awaiting approval for increasing stake in securities JV.
Major US bank, Citigroup is planning to establish a majority-owned securities JV.