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China International Capital Corp (CICC) plans to absorb two smaller brokerages to create a new entity worth 1 trillion yuan (US$140 billion) in assets, as a state-led consolidation gathers pace to meet Beijing's goal of creating investment banks that can compete with the likes of Goldman Sachs.
CICC would take over Dongxing Securities and Cinda Securities through stock swaps with the shareholders of the two peers, it said in an exchange statement on Wednesday night, without giving details. Shares of the three companies will be suspended from trading on the Shanghai exchange for up to 25 days. The deal was pending approval from the companies' boards, shareholders and the regulators, it said.
The consolidation marks the latest move by China's securities industry to fulfil President Xi Jinping's ambition of building financial giants amid an all-out confrontation with the US that threatens financial decoupling. CICC, Dongxing and Cinda are controlled by Central Huijin Investment, a unit of China's sovereign wealth fund, making it likely the merger will proceed smoothly.
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"The restructuring is conducive to building a first-class investment bank and supporting the reform of the financial market and the high-quality development of the securities industry," CICC said in the statement.
Smaller Chinese brokers are seeking mergers to survive in a sector that was whipsawed by years of stock market downturn and pay cuts. Photo: Shutterstock alt=Smaller Chinese brokers are seeking mergers to survive in a sector that was whipsawed by years of stock market downturn and pay cuts. Photo: Shutterstock>
The revamp would consolidate and complement the companies' resources and strengths, which in turn would bring economies of scale, better serve the state's strategy and the economy and boost shareholder returns, according to the statement.
The merged brokerage's total assets of 1 trillion yuan would rank it fourth after Citic Securities, Guotai Haitong Securities and Huatai Securities, according to data provider Wind Information.
The deal would be the most high-profile after the merger between Guotai Junan Securities and Haitong Securities last year, which created an industry giant with 1.68 trillion yuan in assets. It was also conducted through a stock swap, with Haitong ending its listing status on the Shanghai exchange.
繼續閱讀The consolidation in China's 12 trillion yuan brokerage industry has been accelerating over the past year, with smaller players also seeking mergers to survive in a sector that was whipsawed by years of stock market downturn and pay cuts. Guolian Securities' acquisition of Minsheng Securities and Zheshang Securities' takeover of Guodu Securities are among some of the notable ones.
"Consolidation has now become an important way for brokerages to quickly boost their scale and competitiveness," said Sun Tin, an analyst at Soochow Securities. "Through mergers and acquisitions, big players can overcome their shortcomings and solidify advantages, while smaller ones can scale up their businesses in a short period of time."
CICC was founded in 1995 as a joint-venture brokerage with Morgan Stanley, which held a 35 per cent stake. The US investment bank withdrew from the venture in 2010. Beijing-based CICC has a network of more than 200 trading outlets across the country and runs businesses in Hong Kong, New York and London, according to its website.
The brokerage started trading in Hong Kong in 2015 and achieved dual listing in Shanghai five years later.
CICC had total assets of 764.9 billion yuan at the end of the third quarter, Dongxing had 116.3 billion yuan and Cinda had 128.2 billion yuan, according to their quarterly reports.
Central Huijin has a 40 per cent stake in CICC, and controls a 45 per cent interest in Dongxing and a 79 per cent stake in Cinda through its units. The state investment vehicle is also a major shareholder of China Galaxy Securities, Shenwan Hongyuan Group and Great Wall Glory Securities.
The restructuring was likely to fan speculation about more mergers of brokerage units controlled by Central Huijin, according to Soochow's Sun.
"More consolidation could be on the way," she said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2025 South China Morning Post Publishers Ltd. All rights reserved.
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