(Yicai) Feb. 19 -- The China Securities Regulatory Commission has asked Citigroup Global Markets Holdings, a financial services provider under US investment bank Citigroup, to further explain several issues regarding its application to establish a wholly-owned securities unit in China.

To set up a new securities company, Citigroup Global Markets needs to provide supplementary explanations about its decline in net profit in 2022 and demonstrate its compliance with the requirement for major shareholders of "having sound financial conditions and sustainable profitability" based on its operating situation last year, the CSRC said in a feedback on its website on Feb. 9, the last working day before the eight-day Chinese New Year holiday.

Moreover, the CSRC asked Citigroup Global Markets to provide updated long-term credit ratings and outlooks for the past three years, explain the reasons behind the negative credit outlook for 2021 by Fitch Ratings, update the international rankings for the securities brokerage, investment consulting, underwriting, and sponsorship businesses over the past three years, and provide additional information on the data sources and credibility.

The CSRC also requested Citigroup and Citigroup Global Markets to provide updates on any penalties or investigations on them or their controlled entities in the past three years.

Citigroup's application materials to establish a securities company in China were received by the CSRC on Dec. 3, 2021, according to information on the CSRC's website. The application was formally accepted on Dec. 28, 2023.

China lifted its foreign ownership restrictions on securities companies in April 2020. Since then, qualified overseas investors can submit applications for establishing new wholly-owned securities firms or changing the actual controllers of already established securities firms.

In January last year, Standard Chartered Securities became the first foreign entity to receive regulatory approval to establish a new wholly foreign-owned securities company in China. There are nine securities firms in China controlled by foreign investors.

Editor: Futura Costaglione