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Report: Citi may exit Chinese securities JV, seek new partner in China

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Report: Citi may exit Chinese securities JV, seek new partner in China

Citigroup Inc. may consider exiting its joint venture with Shanghai-based Orient Securities Co. Ltd., as its talks to acquire a majority ownership in the joint venture have not progressed, Bloomberg News reported Nov. 12, citing people familiar with the matter.

Launched in 2012, Citi Orient Securities Co. engages in investment banking business in the Chinese domestic market. Citi, which is looking to increase its stake in Citi Orient to 51% from 33%, wants the joint venture to enter into equities and fixed-income trading business. That move would put Citi Orient in direct competition with Orient Securities, the sources said.

Citi has of late received licenses for its fixed-income business, which is separate from the joint venture. It may establish a new joint venture in partnership with a local firm that does not operate in the securities business, the report said.

China has eased its foreign ownership restrictions in the securities market, now allowing foreign partners to own majority stakes in their securities joint ventures. Morgan Stanley plans to boost its stake in its Chinese venture to 51%, while UBS Group AG has already submitted an application to take a majority stake in its own venture with a local partner.

Talks between Citi and Orient Securities are still ongoing and the New York-based bank has yet to make a final decision, the sources added.