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Photo/Zhang Jian

Dec. 17 (NBD) -- Multinational investment bank Citigroup Inc. ("Citigroup") planned to exit its securities joint venture in China.

Engaging in investment banking business in the Chinese securities market, the joint venture Citi Orient Securities Co. ("Citi Orient") was founded by Citigroup's unit Citigroup Global Markets Asia, and Orient Securities Company Ltd. ("Orient Securities") in 2012, with a registered capital of 800 million yuan (116.1 million U.S. dollars).

Orient Securities has a 66.7 percent stake in the joint venture, with the remaining 33.3 percent owned by Citigroup Global Markets Asia.

Orient Securities announced on Monday that Citigroup Global Markets Asia will transfer the stake it holds in Citi Orient to Orient Securities for a price calculated based on the audited net assets value of the joint venture as of December 30, 2018.

Citigroup's decision to exit is made due to changes in market policies and will exert no major influence on operations and development of Citi Orient, according to the announcement.

However, it was reported by Bloomberg earlier that Citigroup was weighing the option to exit Citi Orient after talks with existing joint venture partner Orient Securities about Citigroup raising its stake to 51 percent from current 33.3 percent have stalled.

Since Citigroup has been hamstrung by its partner's reluctance to sell, the U.S. investment bank desires to find a new partner in China, Bloomberg reported citing sources familiar with the matter.

As China now allows foreign firms to take majority ownership in their securities joint ventures in the country, some have been seeking regulatory approvals to uplift their holdings to 51 percent. Swiss financial titan UBS Group AG gained the approval late last month.

Orient Securities said to news outlet quanshangcn that the company has gone through pleasant cooperation with Citigroup and both sides have carried out various multi-level discussions concerning the continued development in China's securities market. Citi Orient's established strategies will not change in the future, the management mechanism will remain stable, and the day-to-day operations and business will not be affected, Orient Securities added.

As of June 30, net assets of Citi Orient stood at 1.423 billion yuan (206.5 million U.S. dollars). The securities joint venture posted 453 million yuan (65.7 million U.S. dollars) in operating revenue and 128 million yuan (18.6 million U.S. dollars) in net profits for the first six months of 2018.

Citi Orient ranks 12th this year in underwriting equity offerings in China, behind Goldman Sachs Group Inc.'s local entity but ahead of those backed by UBS and Deutsche Bank AG, data compiled by Bloomberg show.


Email: gaohan@nbd.com.cn

Editor: Gao Han