China International Capital Corp (CICC) plans to absorb two smaller brokerages to create a new entity worth 1 trillion yuan (US$140 billion) in assets, as a state-led consolidation gathers pace to meet Beijing’s goal of creating investment banks that can compete with the likes of Goldman Sachs.
CICC would take over Dongxing Securities and Cinda Securities through stock swaps with the shareholders of the two peers, it said in an exchange statement on Wednesday night, without giving details. Shares of the three companies will be suspended from trading on the Shanghai exchange for up to 25 days. The deal was pending approval from the companies’ boards, shareholders and the regulators, it said.
The consolidation marks the latest move by China’s securities industry to fulfil President Xi Jinping’s ambition of building financial giants amid an all-out confrontation with the US that threatens financial decoupling. CICC, Dongxing and Cinda are controlled by Central Huijin Investment, a unit of China’s sovereign wealth fund, making it likely the merger will proceed smoothly.
“The restructuring is conducive to building a first-class investment bank and supporting the reform of the financial market and the high-quality development of the securities industry,” CICC said in the statement.
The revamp would consolidate and complement the companies’ resources and strengths, which in turn would bring economies of scale, better serve the state’s strategy and the economy and boost shareholder returns, according to the statement.
The merged brokerage’s total assets of 1 trillion yuan would rank it fourth after Citic Securities, Guotai Haitong Securities and Huatai Securities, according to data provider Wind Information.
