CITIC Securities buys CLSA for $1.25b

CITIC Securities Co, China's largest brokerage by market value, agreed to buy Credit Agricole SA's Asian CLSA unit for $1.25 billion.

CITIC Securities, based in Beijing, completed its purchase of a 19.9 percent stake in the brokerage for $310.3 million, the companies said in a statement. Citic Securities will buy the remaining 80.1 percent in CLSA for $941.7 million subject to conditions including regulatory approval, the companies said.

CITIC Securities and Credit Agricole entered exclusive talks in March over the French bank's remaining 80.1 percent stake in the Hong Kong-based securities business. CLSA, based in Hong Kong, has more than 1,500 employees in 20 locations spanning 13 countries, according to its website. It provides services including equity research, trading and asset management and also advises on stock sales and mergers.

"This is a symbol of European banks' retreat," said Christophe Nijdam, an analyst at AlphaValue in Paris who recommends buying Credit Agricole shares. "CLSA was considered a jewel."

Business will remain as usual at CLSA with the existing independent structure of the management team, according to the statement. Citic will develop cross-border business through CITICS International, it said. CITIC Securities, founded in 1995, is controlled by the State-owned CITIC Group, which is backed by the State Council.

Credit Agricole declined 6.4 percent to 3.21 euros in Paris on Friday, giving France's third-largest bank a market value of about 8 billion euros ($9.7 billion). The stock has fallen 26 percent this year.

CLSA, founded in 1986, was the book runner on 150 deals from 2005 to 2010, raising more than $22 billion, according to its website. Credit Agricole's corporate and investment banking unit owns 65 percent of CLSA, with the broker's staff owning 35 percent.

Credit Agricole, based near Paris, is trimming its balance sheet and cutting costs amid higher capital demands from regulators and a decline in trading and underwriting commissions. Credit Agricole last week entered exclusive talks to sell its other brokerage unit, CA Cheuvreux, to Kepler Capital Markets SA.

Credit Agricole and Citic Securities plan to complete the deal on the remaining 80.1 percent CLSA stake by mid-2013, the companies said.

Bloomberg News