Citic Securities, China Securities secure internal nod for merger plan: Bloomberg News

BEIJING (Reuters) - China's largest broker Citic Securities Co 600030.SS and its smaller rival China Securities Co 6066.HK (CSC) have both secured internal nods for a merger plan, Bloomberg News reported on Thursday, citing unidentified sources.

Citic Group, parent of Citic Securities, will act as the main buyer of a stake in CSC from state-controlled Central Huijin Investment Ltd, making Citic Group the largest shareholder in China’s No.2 brokerage firm, the report said.

The plan has been approved by the Communist Party committees of Citic Securities and CSC, it added.

The merger will create an $82 billion investment bank giant among China’s more than 130 existing brokerage firms, it said.

China’s securities watchdog wants to build industry behemoths in the face of fiercer foreign competition as the country opens markets to Wall Street giants including Morgan Stanley, Goldman Sachs and Credit Suisse.

The China Securities Regulatory Commission (CSRC) was reported last week to be weighing plans to issue investment banking licenses to at least two of China’s largest commercial banks.

CSC counts Beijing State-owned Capital Operation and Management Center as the biggest shareholder with a 35.11% stake, according to company filings.

Central Huijin held a 31.2% stake in CSC, while Citic Securities owned 5% by the end of March.

Citic Securities, CSC, Citic Group and Central Huijin did not immediately respond to requests seeking comment.

Shanghai-listed shares of Citic Securities rose 5.42% on Thursday, while CSC surged to its 10% daily limit.

Reporting by Cheng Leng, Zhang Yan and Ryan Woo; Editing by Clarence Fernandez