RBS Said to Reach Deal on Securities Firm With Chinese Partner By Cathy Chan - Sep 17, 2010 10:23 AM GMT+0700 Email Share Business ExchangeTwitterDeliciousDiggFacebookLinkedInNewsvinePropellerYahoo! BuzzPrint RBS signed a memorandum of understanding with a local partner and applied to the China Securities Regulatory Commission for approval of the venture. Photographer: Simon Dawson/Bloomberg Royal Bank of Scotland Group Plc reached an accord to start a venture with Guolian Securities Co., paving the way for the U.K.?s biggest state-owned bank to manage stock sales in China, said people with knowledge of the matter.
RBS signed a memorandum of understanding with the Wuxi- based firm and applied to the China Securities Regulatory Commission for approval, said two of the people, who asked not to be named because the deal isn?t public. RBS, based in Edinburgh, would hold 33 percent of the venture, they said.
?We are hopeful to have a joint-venture securities company arrangement at some point,? said RBS Asia-Pacific Chief Executive Officer John McCormick in an interview yesterday, declining to identify a partner. Officials at Guolian, based in eastern Jiangsu province, declined to comment.
RBS, which received the world?s biggest bank bailout in 2008 and 2009, joins Goldman Sachs Group Inc. and JPMorgan Chase & Co. in creating a venture in China, the world?s largest market for equity sales. Initial public offerings on the country?s two exchanges account for more than a third of the $152 billion raised globally in 2010, according to data compiled by Bloomberg.
The U.K. bank ranks No. 13 in arranging Chinese overseas stock sales this year, and hasn?t advised on any acquisition by a Chinese company, according to data compiled by Bloomberg.
Guolian Securities was 38th among stock and debt underwriters in China last year after it arranged 4.4 billion yuan ($651 million) of sales, according to the Securities Association of China. The company, formerly known as Wuxi Securities, was created in September 1992 and has about 870 employees and 28 outlets, according to its website.
?Understaffed?
The two companies aim to get final approval for the venture this year, two of the people said.
RBS is trying to increase profit to repay U.K. taxpayers for its government-funded bailout. The bank is selling assets and halted some activities such as leveraged finance as it seeks to reduce risk after the 45.5 billion-pound capital injection.
?We are going to invest in certain markets, such as China, as we?re understaffed in terms of investment bankers,? said Matthew Kirkby, who this week was appointed head of global banking for the Asia-Pacific region. Kirkby, 41, will relocate to Hong Kong from London and remain global head of corporate finance, RBS said Sept. 13.
A tie-up with a local partner is a prerequisite for arranging equity offerings in China, where domestic share sales have surged more than seven-fold in the past decade to 373 billion yuan this year, Bloomberg data show. The local venture will also allow RBS to underwrite bond offerings for China- listed companies.
China Investments
RBS bought a 20 percent stake in China?s Suzhou Trust Co. in 2008 and owns 16.7 percent of the Galaxy Futures Co. venture.
The bank, which acquired parts of ABN Amro Holding NV in 2007, has yet to rebuild its team in the Asian nation after losing bankers including the Dutch bank?s China Chairman Qiu Zhizhong last year. Raymond Yin, co-head of China investment banking, left last week after less than a year in the job, people familiar with the matter have said.
Morgan Stanley was the first Wall Street firm to set up a domestic investment bank in China through its partnership with China International Capital Corp. in 1995, followed by CLSA Asia-Pacific Markets in 2003. Goldman Sachs won approval to form a local investment bank the following year. UBS AG partnered with Beijing Securities Co. in 2006, followed by Credit Suisse Group AG in 2008 and Deutsche Bank AG last year.
http://www.bloomberg.com/news/2010-09-16/...m-with-local-partner.html
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