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Goldman Shifts to Take Majority Stake of China Joint Venture

Goldman Sachs has applied for majority stakes of its Chinese joint venture, the bank confirmed on Wednesday, the latest global bank to do so ahead of Chinese plans to finally allow foreigners full control.

The bank submitted a utility with the China Securities Regulatory Commission on Monday to take its control in Goldman Sachs Gao Hua Securities to 51% – the maximum allowed – from its current 33% holding.

Western banks’ lack of dominance over the JVs, along with their limited contribution to profits, has been a source of irritation for foreign banks in China.

Administrative control would permit foreign banks to supply more companies through their JVs and probably leverage their global reach to win China market share, bankers have said.

Unlike most of the other JVs, Goldman Sachs already has everyday operational control of its joint venture, which gives investment banking services such as equities and bond underwriting and contract advice.

Despite that managerial control, Goldman made it clear it would finally seek to take a majority control too.

Under the new contract submitted to regulators, the securities sales, trading and analysis operations that presently sit in the enterprise of its associate, Beijing Gao Hua Securities, will be folded into the joint venture.

Goldman’s shift to go to 51% follows similar actions by lots of its competitors following a relaxation of the guidelines in late 2017.

UBS was the first to get permission under the brand new guidelines as well as the share it needed for control. Morgan Stanley is ready for its stake purchase to be accredited.

Nomura and JPMorgan have approval and are working to initiate joint ventures from scratch.