By Zhang Ran (China Daily)
Updated: 2008-01-11 09:21

Credit Suisse Group, Switzerland's second biggest bank, plans to take a 33.3 percent stake in local brokerage Founder Securities.

The Zurich-based bank and Founder Securities, a unit of Beijing-based Founder Group, plan to apply for regulatory approval to set up a securities joint venture in the near future, Credit Suisse said yesterday in a statement. The company did not disclose how much it would pay for the stake.

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The joint venture is expected to sponsor and underwrite A shares, foreign investment and government and corporate bonds and be a broker for these securities, according to the statement.

The statement said the two would also explore opportunities for greater synergy.

"When the legislation permits, the parties may also seek regulatory approval for the joint venture to expand its business scope," it said.

Foreign investment banks have been competing to tap the country's booming securities market since the regulator resumed approvals of foreign joint ventures last year after three years of reform.

According to new rules issued by the China Securities Regulatory Commission (CSRC) on December 28, the maximum stake foreign investors can hold in a local securities firm will remain at around 33.3 percent, despite higher limits in other areas.

Morgan Stanley was reportedly planning to buy a 33.5 percent stake in Shanghai-based China Fortune Securities for 4 billion yuan ($550.2 million) in December.

Fang Fang, managing director of JPMorgan Securities (China), said the US investment bank, which has been seeking local partners, is also expected to set up a joint venture with a local brokerage in the first half of this year.

China's brokerages were among the biggest beneficiaries of the booming stock market. They earned a combined 138.2 billion yuan in trading stocks, mutual funds and options last year, the Shanghai Securities News reported.

Liang Jing, an analyst at Guotai Jun'an Securities, predicted securities firms would see growth of more than 20 percent in market value, trade volume and underwriting, despite an expected slowdown in earnings growth this year after stocks retreated from an October record.