JPMorgan One Step Closer To Fully Owning China Securities Venture

JPMorgan Chase & Co JPM now controls 71% of its Chinese securities joint venture after it bought a 20% stake from a local partner, Reuters reported Sunday.

What Happened: The stake in the securities JV was put on sale by state-owned Shanghai Waigaoqiao FTZ, according to a filing made with the Shanghai United Assets and Equity Exchange in September, reported Reuters.

The Jamie Dimon-led bank reportedly paid $26.5 million for the stake in a deal that was concluded on Oct. 23.

The New York-based bank was the only party that could increase its stake in the venture as the other shareholders had given up their rights to pick up the 20% share, according to Reuters.

Why It Matters: The deal positions JPMorgan as the foreign bank with the largest ownership stake in a mainland China securities joint venture, noted Reuters.

The timing of the deal is significant as there are increasing geopolitical tensions between the United States and China and a simmering trade war.

Competitors — Morgan Stanley MS, Goldman Sachs Group Inc GS, and UBS Group AG UBS — all reportedly hold 51% stakes in their securities operations on the mainland but have plans to obtain full ownership.

JPMorgan’s third-quarter earnings per share rose 8.96% year-over-year to $2.92, beating estimates of $2.23.

Price Action: JPMorgan shares closed 0.9% higher at $98.04 on Friday.

Photo by Ken Lund via Flickr