HSBC Holdings plc (LON:HSBA) has been given the go-head by Chinese regulators for its investment banking joint venture with state-backed fund, Qianhai Financial Holdings Co.
The lender is the first foreign bank to win Chinese approval for a majority-owned securities joint venture and it follows a 20-month wait for a decision.
HSBC will invest 918mln yuan for 51% of the venture with Quianhai and it is expected to begin operations by the end of the year.
The operations of the venture, HSBC Qianhai Securities Ltd., will include trading locally listed securities, debt underwriting, equity research and advising on domestic and outbound mergers and acquisitions.
It will be based in the southern Chinese city of Shenzhen in the Qianhai special economic zone.
The approval by the China Securities Regulatory Commission will allow HSBC to expand its business in China as part of its plans to grow annual profits in the fast-growing southern region.
"The establishment of this joint venture is an important step for HSBC to deliver on our strategic commitment to invest in and grow our business and operations in mainland China," HSBC chief executive Stuart Gulliver said in the statement today.
HSBC announced the venture in November 201 when it said it would hire 4,000 new staff and invest billions to make the southern Pearl River Delta region its gateway to China. But the plans were delayed by China’s slowing growth. This means the bank has potentially lost its advantage over rivals with more restrictive licenses as China has eased rules on foreign banks.