(Yicai Global) Sept. 3 -- Credit Suisse Group is negotiating with Founder Securities, the Chinese shareholder in their joint venture securities trading firm CS Founder Securities, and regulators on raising its shareholding in the JV firm to 51 percent from 33 percent. The company does not rule out further increases in the future.
Credit Suisse has been reorganizing and now wishes to increase its investment in fields with the potential for sufficient funds, declining risk exposure and rising profits, said Credit Suisse chief executive Tidjane Thiam in an exclusive interview with Yicai Global on Aug. 31. Increasing its shareholding ratio in the JV is part of the company's plan in China, he added.
Credit Suisse will increase its investment in CS Founder in a non-disclosed agreement, after which it will up its holding to 51 percent from 33 percent to become controlling shareholder, Beijing-based Founder Securities announced in June. It has abandoned its own planned capital increase, and will see its stake fall to 49 percent from 66.7 percent, per the announcement.
Founder Securities' withdrawal as controlling shareholder will also resolve the problem of horizontal competition between CS Founder and Founder Securities subsidiary China Minzu Securities.
The company has not decided the specific schedule for completing the increase as it needs to liaise with Founder Securities and CS Founder, Thiam said. Credit Suisse has achieved progress after its three-year reorganization and now has the ability and willingness to raise its investment in target markets. China is a key one, the Zurich, Switzerland-headquartered firm believes.
Many JV securities traders need time to increase their shareholdings and consider various factors such as appropriate price, means of communicating with regulators, and future business plans and recruitment, insiders told Yicai Global.
Short-term business expansion in China may dilute the return on equity of foreign banks, some believe, but Thiam is unconcerned over this as he thinks that enlisting local talent is the true key to expanding in China.
Credit Suisse, Nomura Securities and JP Morgan Chase have all announced their submission of applications to China Securities Regulatory Commission to set up foreign securities JV firms in which they planned to hold a 51 percent stake.
Editor: Ben Armour