In a bold move to compete with global financial giants, China is merging two of its largest state-backed brokerages, Guotai Junan Securities and Haitong Securities, creating a behemoth with $230 billion in assets.
This strategic consolidation is part of Beijing’s broader ambition to strengthen its investment banks, positioning them to rival Wall Street heavyweights.
The merger, announced Thursday, comes through a share swap and will eclipse Citic Securities, making the new entity China’s largest brokerage.
Both firms, partly owned by Shanghai’s state assets administrator, aim to finalize the deal after approvals from boards, shareholders, and regulators.
This merger is no small matter—it follows President Xi Jinping’s call for top-tier investment banks capable of competing on a global scale.
The nation’s securities watchdog has also endorsed consolidation, targeting the creation of two or three global players by 2035.
With 145 securities firms controlling a combined $1.7 trillion, China’s financial sector is primed for transformation.
The firms noted, “The combination is conducive to building a first-class investment bank and promoting the high-quality development of the industry.”
Yet, the merger is as much about survival as it is about growth.
China’s capital markets have languished amid sluggish economic growth, dragging down profits across the sector. Haitong, valued at $13.6 billion in Hong Kong, posted a staggering 75% decline in profits in the first half of the year.
Guotai Junan, with over 15,000 employees, and Haitong’s 13,600 staff are bracing for potential job cuts, as consolidation often leads to streamlining.
The backdrop to this consolidation is China’s drive to create an “aircraft carrier-sized” brokerage capable of facing off against Wall Street.
The financial markets have gradually opened since 2020, allowing full foreign ownership—raising the stakes for domestic firms.
The merger could trigger a wave of similar deals in the sector, with other brokerages like Guosen and Guolian already making moves.
This consolidation reflects a broader push for growth in business as the financial industry prepares for a new chapter, where China’s homegrown titans may soon go toe-to-toe with the biggest names in global finance.
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