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Bank of America Applying To Set Up A Securities Firm In China

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EDITOR'S NOTE: Bank of America is reportedly planning to apply to set up a securities firm in China, according to Bloomberg. The bank, which is the only U.S. bank to not feature this type of operation in China, is pursuing this in order to catch up with competitors like JPMorgan Chase and Goldman Sachs, which have been steadily raking in billions of dollars in profits from the $54 trillion financial market. BoA joins Citigroup, which is also planning a new investment banking and trading venture in China, as U.S. banks are trying to gain more of a foothold in the world’s second-largest economy.

Bank of America Corp. is planning to apply to set up a securities firm in China, joining a push by rivals including JPMorgan Chase & Co. and Goldman Sachs Group Inc. into the $54 trillion financial market.

The bank aims to apply for regulatory approval early next year, people familiar with the matter said, asking not to be named discussing a private matter. It plans to submit applications for licenses allowing it to trade and underwrite stocks and bonds as well as hedge risk, one of the people said. The timing is subject to change. A spokesman for the lender declined to comment.

The Charlotte, North Carolina-based bank is a latecomer after China last year allowed global banks to operate fully controlled units with firms such as Goldman and JPMorgan already gaining approval. Lenders are investing heavily in both operations and adding staff, expanding their footprint in everything from investment banking to asset management. 

With billions of dollars in potential profits to chase, global banks have so far been undeterred by the rising political tension and a broad crackdown by Beijing on its private sector that has roiled markets.

Bank of America had so far been the only major U.S. bank to decide against pursuing a securities venture in China, but it has large exposure to other banking areas in the world’s second largest economy. The lender has also been building out its investment banking in the broader Asia Pacific region, catching up to its main rival, JPMorgan.

A major focus for many banks is also asset management. But Bank of America isn’t at this time considering a move into that area, the people said.  

Citigroup Inc. is also planning to set up new investment banking and trading operations in China. Morgan Stanley set up its own China securities venture in January 2011 and is now moving closer to taking full control after announcing plans to boost its stake in May.

— With assistance by Charlie Zhu, Evelyn Yu, Dong Cao, and Cathy Chan

Originally posted on Bloomberg.

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