China plans to merge domestic broker First Capital Securities with smaller rival Capital Securities, three sources said, underscoring Beijing’s determination to consolidate the brokerage industry to take on the giants of Wall Street.
China wants to level the playing field as it opens up its financial markets to foreign players including Goldman Sachs and Morgan Stanley, reported Reuters.
In addition to consolidation, China wants to build firms mighty enough to take on Wall Street behemoths in the domestic industry, which is worth 8 trillion yuan (US$1.2 trillion) and has over 130 firms.
The merger strategy is being encouraged by the China Securities Regulatory Commission, the top securities regulator, the state-run China Securities Journal reported last month.
Shenzhen-listed First Capital, with a market value of US$6.2 billion, plans to issue new shares to private Capital Securities in a deal valuing the smaller firm at about US$1.4 billion, said one source, speaking on condition of anonymity as the information was private.
The merger of the two firms – ranked 44th and 62nd respectively by operating revenue last year – could be finalised as early as this year, the source added.
Full Content: Reuters
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