Citi Reportedly Plans To Launch Wholly Owned China Unit Amid Economic Slowdown: Is The Risk Worth It?

Citigroup, Inc. C reportedly plans to launch its fully-owned China investment banking unit by the close of this year and aims to recruit approximately 30 individuals for the venture.

The bank may expand staffing in the unit threefold, concentrating on the domestic capital market, Reuters reported, citing people aware of the matter. 

The team is expected to grow to nearly 100 in the coming years, with a combination of local hires and transfers from Hong Kong and other markets.

The Chinese securities regulator granted approval to the U.S. bank for establishing the unit last month, as per the unnamed source, Reuters added.

The official record of the China Securities Regulatory Commission (CSRC) indicates that on December 28, the regulator "made a decision" regarding Citi's application to establish a local investment banking unit, the report read. However, it did not provide further details or elaboration.

With the launch of the China venture, Citi will join its Wall Street counterparts, including Goldman Sachs Group, Inc. GS, JP Morgan Chase & Co. JPM, and Morgan Stanley MS, which have increased their equity stakes in local brokerage businesses in recent years.

Citi's China expansion comes amid a problematic situation when China's economic growth is slowing, and its policy is evolving.

"You're going to see more ringfencing, and you're going to see smaller footprints," John O'Connor, former chairman of JPMorgan Alternative Asset Management, told Bloomberg. "At some point, is the reward really worth the risk?"

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Price Action: C shares are trading higher by 0.58% to $53.95 premarket on the last check Thursday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.