SHANGHAI: China has started the process of potentially merging its two biggest brokerage firms to create a company that can better compete with the global investment banks as the country opens up its financial markets, according to people familiar with the matter.
A merger between Citic and CSC, both based in Beijing, would create an investment bank valued at US$67 billion, surpassing even Goldman Sachs Group Inc in market capitalisation. The country’s opening of its US$45 trillion financial industry has added urgency for China to build a company that can go head-to-head with the Wall Street giants.
Taken together, China’s 131 brokers have assets that are equal to what Goldman Sachs sits on by itself. They are also far from being full-service investment banks, counting on mom and pop traders across the country to contribute much of their revenue. The market is also fragmented, with the top five brokers capturing just about a third of the industry’s revenue, according to Goldman research.
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