BNP Paribas gets green light for fully owned Chinese securities venture

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BNP Paribas has won approval to set up a fully owned securities brokerage in China, the first regulatory green light of its type for months as the eurozone’s biggest bank makes a fresh bid to expand in the country’s financial markets. 

China’s Securities Regulatory Commission said in a statement that BNP Paribas’ securities business had been approved in Shanghai with registered capital of Rmb1.1bn ($150m).

Its business would include brokerage, proprietary trading, investment consulting, and securities asset management, the CSRC added.

Since 2021, China has allowed foreign banks to take full ownership of their securities businesses in the mainland, which previously required Chinese joint venture partners. 

A handful of Wall Street banks and other rivals such as Standard Chartered have since applied to buy out partners or set up shop with full control of their brokerages, with approvals trickling through. 

Three years ago, JPMorgan and Goldman Sachs were among the first to take advantage of the new rules, which were part of a regulatory opening-up of China’s financial system that included a host of asset management licences for Western firms.

BNP confirmed on Monday it had received approval, after making the application in 2021.

“BNP Paribas welcomes this decision from the China regulators and remains committed to exploring opportunities for growth in the China market, where the Bank has had a long-standing presence,” the bank said, adding that it would work with local and international clients.

The green light, however, comes as China’s economic momentum has slowed and financial activity has declined, with offshore equity issuance falling to its lowest level since 2003.

IPO activity has also slumped in the domestic stock market, where state-backed brokerages such as Citic and CSC Financial dominate activity.

Rising geopolitical tensions between Beijing and Washington have also sent a chill through foreign businesses on the mainland. 

BNP’s move marks a new attempt to crack the local market after a pioneering joint venture it set up with local partner Changjiang Securities in 2003 fell apart four years later.

It pulled out of that set-up, selling its 33 per cent stake to Changjiang, over what people close to the company said at the time were disagreements over strategy and appointments.

BNP has a 13.8 per cent stake in Nanjing City Commercial Bank in China, whittled down from its initial holding of 19 per cent bought in 2005. It also has a wealth management joint venture with Agricultural Bank of China, in which it has a 51 per cent stake.

BNP’s Chinese expansion comes as the French lender is also deploying some of the cash earmarked for small and mid-sized acquisitions left over from its $16.3bn sale of Bank of the West in the US.

On Sunday BNP said it had agreed to buy a 9 per cent stake in Belgian insurer Ageas from China’s Fosun Group for about €730mn.