China's Founder Securities may sell stake in JV with Credit Suisse: filing
HONG KONG (Reuters) - China's Founder Securities (601901.SS) may sell its stake in Credit Suisse Founder, its joint venture with the Swiss bank, because the Chinese broker is merging with peer China Minzu Securities.
Founder Securities' (601901.SS) plans to merge with China Minzu may create a conflict of interest with its joint venture with Credit Suisse (CSGN.VX), forcing it to sell out of the latter, Founder said in a regulatory filing in Shanghai on Friday.
It is not immediately clear what would become of Credit Suisse Founder should Founder Securities sell out, given that foreign firms are prohibited by Chinese law from owning majority stakes in onshore securities firms.
Credit Suisse officials could not be immediately reached for comment.
The joint venture, like those owned by Credit Suisse's peers like Deutsche Bank, Citi and JPMorgan, was set up under rules that allow foreign banks to own minority stakes in such ventures with local securities firms in China.
The structure allows foreign firms to conduct share underwriting and other capital markets business for clients in China, while maintaining control of the joint venture in Chinese hands.
Established in October 2008, Credit Suisse Founder has, like other Sino-foreign securities joint ventures, struggled to make consistent significant profits. Returns have been hampered by competition from established rivals and a freeze since last October on new initial public offerings.
Credit Suisse Founder is 66.7 percent owned by Founder Securities and 33.3 percent owned by Credit Suisse, with a total investment of 800 million yuan ($131.29 million).
At the end of June 2013, the joint venture's assets were worth 884 million yuan and it made a net loss of 10 million yuan in the first half of the year.
Spokespeople for Credit Suisse did not immediately return calls and emails requesting comment.
Source text in Chinese: link.reuters.com/kyn84v
(Reporting By Lawrence White and Meg Shen)
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