Credit Suisse Group, Switzerland's second-largest bank, proposed to take a 33.3 percent stake in a Chinese securities joint venture, after teaming up with Founder Securities Co Ltd, the lender said today in a statement.

 

Credit Suisse and Founder Securities intend to apply for the establishment of a joint venture in the near future. In addition, Credit Suisse and Founder Group, the parent firm of Founder Securities, intend to explore establishing a strategic alliance in areas such as domestic institutional brokerages and wealth management. Both require regulatory approval, according to the statement.

 

''Credit Suisse believes that in Founder it has an extremely strong partner, with invaluable local expertise and experience in the Chinese financial services industry,'' said Paul Calello, chief executive officer of Credit Suisse Investment Bank.

 

Kai Nargolwala, CEO of Credit Suisse Asia Pacific, said this was a great way to start 2008.

 

Subject to receiving all regulatory approvals, the joint venture, under Credit Suisse and Founder Securities, will engage in the sponsoring and underwriting of A-shares, foreign investment shares, government and corporate bonds.

 

Last year, China's brokerage firms were among the biggest beneficiaries of China's booming stock market. They reported a combined 138.2 billion yuan (US$18.9 billion) profit from trading stocks, mutual funds and options in 2007, said Shanghai Securities News.

 

The lucrative sector has begun to attract foreign investors.

 

The United States financial service firm Morgan Stanley signed an agreement with China Fortune Securities Co to set up a joint venture last month. US-based investment bank Bear Stearns Co Inc and CITIC Securities Co also formed a strategic partnership.

 

Also, South Korea's Daishin Securities Co teamed up with China Merchants Securities Co, while the Bank of New York Mellon Corp partnered with Western Securities Co to tap the nation's fast growing capital market.

 

China has approved four joint-venture brokerages and 28 joint venture mutual fund management firms in the mainland.

 

Under new rules issued by the China Securities Regulatory Commission on December 28, the maximum stake foreign investors can hold in a local securities firm will remain 33.3 percent.

 

(Shanghai Daily January 10, 2008)