BEIJING (Reuters) - Swiss bank Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) said it plans to launch operations of its China joint venture in early December, becoming the latest Western financial group to start a domestic securities business in the country.
After building up equities and fixed income units with Chinese joint venture partner Founder Securities, the bank plans to add a research team as well, said Neil Ge, chief executive of the new group, called Credit Suisse Founder Securities Ltd.
"We want to be a significant player in the domestic capital markets, and want to compete head to head with our peers," he said, speaking at the Reuters China Summit on Thursday.
Ge acknowledged that the equity capital markets were all but frozen, although he added that companies were still hungry for capital. He said Credit Suisse expects equity issuance to slightly increase in 2009.
In the meantime, Ge said he has seen strong demand in the corporate bond market lately, another way of raising money while equity and loan markets are wobbling.
Ge, a veteran banker who had stints in New York, Tokyo, Hong Kong and Shanghai, said he expects non-performing loans (NPLs) will increase across China, with exporters in the country's provinces struggling to cope with slowing demand.
"I think that it won't be a disaster, because China is such a diversified economy," he said.
Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) won approval in June from regulators to set up a securities joint venture with Founder Securities, allowing it to underwrite domestic A shares as well as government and corporate bonds.
The bank joined rivals UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz)(UBS.N: Quote, Profile, Research, Stock Buzz) and Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) among foreign investment banks with domestic joint ventures in the fast-growing but restrictive Chinese market.
As part of the deal, Credit Suisse will own 33.3 percent of the Beijing-based firm. Founder Securities Chairman Lei Jie will be the chairman.
The approval was the first by the China Securities Regulatory Commission since new rules were adopted on Sino-foreign securities joint ventures last December.
TOUGH TIMING
The launch of Credit Suisse's JV comes as the Chinese financial markets undergo sharp volatility, having plunged in recent weeks as the global financial crisis that started in the United States spread east.
Equity issuance has dropped, with only a few companies in the last few months finding the courage to list shares.
The benchmark Shanghai Composite Index .SSEC closed at 1,717.722 points on Thursday, down 72 percent from its record intraday high of 6,124.022 hit last October. Continued...
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