Goldman Sachs Seeks Full Ownership of Chinese Securities Joint Venture



Goldman Will Likely Be the First Global Bank to Fully Own its Chinese Securities Business

Goldman Sachs (GS) is on track to become the first global bank to acquire full ownership of its Chinese securities business. The bank is likely to take 100% ownership of Goldman Sachs Gao Hua Securities Co., which it plans to rename Goldman Sachs (China) Securities Co.

For the past 17 years Goldman has worked with a domestic brokerage to manage the securities joint venture. But in March the bank received approval from China’s securities regulator to take majority control of Gao Hua Securities Co.

What Makes Gao Hua Securities Attractive to Goldman

Beijing Gao Hua Securities Co. began in 2004 as a joint venture with Goldman. At the start Goldman owned 33% of the company and the Chinese firm held a 67% majority stake. The company was founded by Fang Fenglei and investment firm Legend Holdings.

Last year Goldman Sachs Gao Hua reported $79.3 million in revenue—a 14% increase from the year before. According to Goldman executives, full ownership of Goldman Sachs Gao Hua would mean the bank could manage its Chinese operations more closely and invest in asset management and private wealth sectors.

US Banks Turn Toward China

China is the world’s second largest economy, and the only major world economy expected to grow this year. US financial institutions have been working to establish a more significant presence in the country for years. Capital markets are seeing explosive growth in China at the moment.

American banks’ eagerness to invest in China signals that Wall Street is still looking to build out its presence in the country in light of the US-China trade war. In January Washington and Beijing signed a pact that gives American banks greater reach in China’s financial sector. Goldman, as well as JP Morgan Chase (JPM), Morgan Stanley, Citigroup (C), and other American banks are also making significant investments in China.


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