Goldman, Morgan Stanley receive approvals for majority stakes in China ventures

Goldman Sachs and Morgan Stanley announced that they had received the final regulatory approvals to take majority stakes in their China securities joint ventures, as Beijing continues to open its financial sector to foreigners.

The approvals come as policymakers and authorities step up efforts to shield the world’s second-largest economy, battered by the coronavirus pandemic.

Goldman and Morgan Stanley received the nods from the China Securities Regulatory Commission to raise their stakes in Goldman Sachs Gao Hua Securities and Morgan Stanley Huaxin Securities from 33% to 51% and 49% to 51%, respectively, the two Wall Street banks said in separate statements.

Majority ownership of the joint ventures potentially allows the U.S. banks to expand operations in China, and better integrate them with their global businesses.

Goldman in 2004 set up its China securities JV with Beijing Gao Hua Securities, which was co-founded by veteran Chinese banker Fang Fenglei.

Unlike most of the other China JVs, Goldman already has day-to-day operational control of its JV, which offers investment banking services such as equities and bond underwriting and deal advice.

Despite that managerial control, Goldman has long made it clear it would eventually seek to take a majority stake too.

Shanghai-based Morgan Stanley Huaxin Securities was established in 2011 and its existing operations include underwriting and sponsoring equity and debt offerings as well as proprietary trading of bonds, it says on its website.

China raised the cap on foreign ownership of securities operations to 51% in 2018. Until then international banks had been allowed only minority stakes in their Chinese joint ventures.