Citigroup Plans to Establish New Investment Bank in China by Next Year

   By Jing Yang and Yifan Wang 
 

Citigroup Inc. is aiming to start securities and futures operations in China by the first half of next year, joining a string of international banks looking to expand into the world's-second largest economy as Beijing opens up its financial markets.

The third-largest U.S. bank by assets is planning to submit applications to the China Securities Regulatory Commission for a securities license that will allow it to underwrite yuan-denominated stocks and bonds, as well as trade them for clients. It will also seek a license for futures operations, a person familiar with the matter told The Wall Street Journal on Monday.

The bank is planning to submit applications for the licenses by June 30, and aims to have the business up and running in the first half of 2022, the person said.

Citigroup is in the process of naming a chief executive officer and a chief compliance officer for the China operations, as required by the regulator. The new operations will have 100 to 120 people initially, the person said, adding that about 60% of the staffers would be new hires and the rest will be existing employees, particularly those in mainland China and Hong Kong.

The bank plans to grow the team to 150 people in the next five years, the person said.

Citigroup's plans come as the world's biggest banks are increasingly making inroads into the Chinese market as the country opens its massive financial markets to foreign companies, a major compromise made by Beijing in the first phase of the U.S.-China trade pact signed in early 2020.

Goldman Sachs has applied for full control of its local securities unit in China, while JPMorgan Chase & Co., UBS Group AG, Credit Suisse Group AG and Morgan Stanley all already have majority-controlled securities units. JPMorgan also operates a fully controlled futures business in the country and is awaiting approval to take 100% ownership of the local asset management venture.

Citigroup has been behind the curve, partly because it had to first exit an existing minority venture with Orient Securities Co., which it completed last year.

Bloomberg first reported details of Citigroup's China expansion plan. The Journal had previously reported Citigroup intends to apply for the securities and futures licenses in China.

The securities and futures business plan is in line with Citigroup's strategic shift away from consumer banking and toward lucrative wealth-management and institutional businesses in Asia, serving a rising number of wealthy entrepreneurs and their businesses.

The new strategy is one of the first big changes under Citigroup CEO Jane Fraser, who took the top job at the company last month.

Citigroup last week said it will exit its consumer franchises in 13 overseas markets, 10 of which are in Asia.

Write to Ben Otto at [e-mail]

(END) Dow Jones Newswires

April 19, 2021 07:17 ET (11:17 GMT)

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