China to liquidate No 5 securities broker
(Agencies)
Updated: 2005-05-10 09:14

China will shut its fifth-largest brokerage, Southern Securities, a group set up to liquidate the house's assets said on Tuesday, in Beijing's biggest move to clean up a loss-making but crucial industry.

Sources had told Reuters two weeks ago that Beijing had decided finally to shut the firm, the flagship securities house in Shenzhen, home to the smaller of China's two stock exchanges.

Regulators and the Shenzhen government established a working team to seize the brokerage in an unprecedented move in early 2004, citing mismanagement and "irregularities."

"The China Securities Regulatory Commission has issued a decree retrieving the business license for Southern Securities," the brokerage's liquidation group said in a statement published in the official Shanghai Securities News.

"Since April 29, the working team has entrusted the Shenzhen government to invite intermediaries to set up the group to help liquidate the brokerage's debts," the group said.

The group urged both institutional and individual creditors to claim money owed by Southern Securities from May 19 to August 19, with application forms available on the brokerage's Web site .

Closing Southern Securities would send a strong warning to an industry crowded with 130-odd players, about half of which sank into the red in 2004 amid a protracted market slump, according to analysts.

Southern Securities' debt amounts to more than 10 billion yuan ($1.2 billion), sources have said.

Dismal stock market performances have compounded woes for a securities industry that still relies on plain-vanilla trading commissions for the bulk of its income.

The benchmark index has fallen more than 10 percent since the start of this year after sliding 15 percent in 2004 to rank as the world's worst-performing major index. It is currently hovering at six-year lows.

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