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05 November 2019
INVESTMENT

SocGen to set up fully controlled China brokerage

The bank said it’s studying the conditions to set up a security entity in China late next year, a move that would see it build the business itself rather than buy a local firm.

SOCIETE GENERALE'S PARIS HEADQUARTERS/BLOOMBERG


Societe Generale is considering a fully owned brokerage in China, joining a rush by the world’s biggest banks as the country speeds up the liberalisation of ownership restrictions in the financial sector, reported Bloomberg.

The French lender’s previous plans for China included investing CNY 1 billion ($142 million) to obtain a 51 per cent-owned local brokerage, but SocGen is becoming more ambitious as it seeks growth abroad and retrenches in a sluggish European market.

SocGen stated it is committed to entering the Chinese securities market, adding that the bank sees the opportunity to bring in expertise in risk management through a diverse range of investment instruments.

 Last month China’s securities regulator said that overseas institutions can apply for total control of their onshore ventures from next year. After waiting for that step for decades and despite trade tensions between China and the US—Wall Street lenders are moving including Citigroup and Goldman Sachs Group are among those seeking fully-owned local brokerages.

SocGen is already in the midst of a cost-reduction plan. Since 2017, it’s targeted the French retail business as well as its investment bank for cuts after missing financial targets.

More cost cuts at SocGen have not been ruled out given the likelihood that negative interest rates in Europe will last—one option is to shrink the bank’s footprint on the continent further.

Former Deputy Chief Executive Officer Didier Valet told China’s Economic Observer last year that SocGen sought five licences, including securities trading, and was looking for partners for a Shanghai-based venture, depending on how the regulatory picture evolved.

Citigroup, which is dissolving its investment-banking joint venture in China, may initially focus on brokerage and futures trading while expanding its custodian services.


RELATED STORIES: CITIGROUP CHINESE SECURITIES MARKET SOCIETE GENERALE GOLDMAN SACHS GROUP

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