Citigroup to seek licences for new wholly-owned securities business in China

Chad Bray
·3-min read

Citigroup plans to apply later this year to open a new wholly-owned domestic securities business in China as it joins foreign banking rivals in expanding their presence on the mainland, according to people familiar with the matter.

The American bank plans to apply by the second half of this year for licences that would allow it to underwrite domestic securities, engage in advisory services on local deals and conduct trading for clients, as well as engage in stock futures, said the people, who were not authorised to discuss the matter publicly.

Citi plans to hire 50 to 100 people for the business, the people said. Citigroup continues to explore opportunities to expand further and support clients in China, a spokesman said, declining to comment on the bank’s plans.

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The bank was granted a domestic fund custody licence in September, becoming the first American bank to receive one.

Bloomberg reported Citi’s plan to seek the onshore licences earlier on Monday. The move comes two years after Citi agreed to sell its stake in Citi Orient Securities to its joint venture partner.

Since the sale, Beijing has eased rules on foreign ownership in the financial services sector, prompting foreign lenders from Goldman Sachs to JPMorgan Chase to UBS to seek full control of their domestic businesses.

Citigroup plans to exit its retail banking business in China as part of a revamp that will see the American bank focus on wealth centres in Hong Kong and Singapore. Photo: Nora Tam
Citigroup plans to exit its retail banking business in China as part of a revamp that will see the American bank focus on wealth centres in Hong Kong and Singapore. Photo: Nora Tam

Credit Suisse recently said it planned to triple its workforce on the mainland over the next three years.

Citigroup has had a presence in China since 1902 and has routinely acted as an adviser for Chinese companies seeking listings in Hong Kong or the United States, as well as Chinese companies raising money overseas. That includes a “homecoming” of Chinese firms listed in the US seeking secondary listings in the city.

The bank serves more than 1,000 multinational clients with operations in China and its corporate bank has helped Chinese companies raise about US$30 billion globally in the past 12 months.

Last week, the bank said it would exit the consumer banking business in 13 international markets, including China, and focus on wealth centres in Hong Kong, Singapore, the United Arab Emirates and the United Kingdom.

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Citi has operated onshore retail branches in China since 2007, but lacked the scale to effectively compete on the mainland in the consumer banking business. It still plans to serve wealthy and corporate clients in China after the revamp.

The bank plans to hire up to 2,300 people in its wealth business in the Asia-Pacific region, including about 1,100 relationship managers and private bankers, as it seeks to increase its assets under management in the region by US$150 billion by 2025. That would represent an increase of 50 per cent from the about US$300 billion it currently manages in the region.

As part of its expansion plans, Citi expects to add about 500 jobs in its wealth business in Hong Kong, including 300 relationship managers, as it hopes to benefit from rising affluence in the Greater Bay Area.

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