Citigroup Applies For Chinese Securities License: Report

Citigroup Inc. C has reportedly entered an application for a securities license in China.

What Happened: The New York City-headquartered bank submitted its application to the China Securities and Regulatory Commission, according to a Wall Street Journal report sourced from an unnamed "person familiar with the matter." With this license, Citigroup would be able to underwrite yuan-denominated stock and bond offerings and handle the trading of those securities.

Citigroup is also planning to apply for a futures license in early 2022, and it intends to hire approximately 100 people in China over the next two years to support its operations in that country.

See Also: At The Close: Cathie Wood Stocks Get Hammered

Why It Happened: Citigroup is the latest major bank taking a new look at the Chinese market following the 2020 trade deal with the U.S. that lifted ownership restrictions on foreign banks operating in China. Under the terms of that deal, foreign financial institutions can establish wholly-owned units for dealing in securities, futures and asset management.

Prior to the 2020 deal, foreign companies had to team with Chinese companies on those operations. Citigroup had established a minority-owned securities joint venture with Shanghai-based Orient Securities in 2012, but withdrew from the partnership in 2019 when the Chinese partner refused to give Citigroup control of their venture.

Nonetheless, the company has remained focus on China. In September 2020, it became the first U.S. bank to receive a domestic fund custody license in China. Two months ago, it entered into a strategic partnership with China Guangfa Bank focused on wealth services that enables Chinese residents in nine cities in the southern province of Guangdong to buy investment products in neighboring Hong Kong and Macau while the individual investors in those cities were able to buy onshore products.

Photo: The Focal Project / Flickr Creative Commons