China has loosened up its regulations and will now allow banks to distribute foreign mutual funds later this year. Winners are expected to be Citigroup, Inc. (NYSE: C) and HSBC Holdings plc (NYSE: HBC). The move from the China Securities Regulatory Commission comes after more rounds of discussions with Washington.
Zacks has noted that liberalization of the China financial industry would open up opportunities for the foreign banks while boosting competition in that local market. It was also noted that U.S. and U.K. banks are already scrambling to set up joint ventures in China for this expansion.
Reuters reported that foreign banks will face stiff competition from the likes of branch offices of Commercial Bank of China, Bank of China, and China Construction Bank.
What is interesting is that Bank of America Corporation (NYSE: BAC) has reportedly been considering a sale of its stake (or part of its stake) in China Construction Bank in an effort to shore up about $10 billion in capital without having to go to the market. If Bank of America wants to get in on this for its financial advisory and for Merrill Lynch, it may want to hold off on that sale or it may want to keep the majority of the stake it owns.
JON C. OGG