Goldman Sachs Moves to Full Ownership of China Securities JV

By Reuters
October 18, 2021 Updated: October 18, 2021

Goldman Sachs said on Sunday it received approval from China’s securities regulator to take full control of its mainland securities business.

The U.S. bank said it would buy the remainder of Goldman Sachs Gao Hua Securities Company Ltd. (GSGH), and rename it as Goldman Sachs (China) Securities Company Ltd.

The migration of its onshore business units from Beijing Gao Hua Securities to GSGH was underway, it added.

“This marks the start of a new chapter for our China business following a successful 17-year joint venture,” Goldman Sachs said in a statement.

It becomes the second Wall Street firm to be granted approval to shift to full ownership of its securities business after JPMorgan Chase & Co. moved to 100 percent in August.

Securities businesses in China typically house investment banking, research, equities, and fixed income businesses.

Unlike most of the other China joint venture (JV), Goldman had day-to-day operational control of its business even with its minority ownership.

Lucrative underwriting fees on equity and bond transactions—especially initial public offerings— in China’s expanding capital markets have been the driving force for Western banks to increase stakes in their mainland business.

Full ownership could allow foreign banks to expand their operations in the multi-trillion-dollar Chinese financial sector, and better integrate them with their global businesses.

Morgan Stanley currently owns 90 percent of its securities JV with partner Shanghai Chinafortune Co. Ltd after increasing its stake in May.

China’s regulators examined Goldman Sach’s application to move to full ownership since the bank flagged its intention to buy out its partner in December.