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Money

Citic may near a Sino-French brokerage venture

(Agencies)
Updated: 2010-04-19 14:54

Global distribution

CLSA would take over Citic's international and Hong Kong businesses over time, the people said, declining to give a timeframe. Citic's stake in CLSA will give it access to the Hong Kong-based broker's global distribution network, one person said.

CLSA, founded in 1986, has more than 1,350 workers and focuses on equity and economic research, trading and asset management. It also advises on stock sales and mergers. CLSA expanded its US operations and opened a business in Australia since early 2009. Management holds 35 percent of the brokerage.

The firm's venture with Fortune Securities won regulatory approval in June 2008 to trade shares in China, whose stock market is the world's third-largest by capitalization, according to Bloomberg data.

The Chinese venture, called Fortune CLSA Securities Ltd is one-third owned by CLSA. CLSA will own the same stake in the new venture with Citic Securities, which will include yuan- denominated stock underwriting, institutional broking and research in China, one of the people said.

China rankings

Citic Securities's brokerage was 14th last year in trading shares and mutual funds in the country, according to the Securities Association of China. The ranking excludes its 60 percent stake in China Securities Co, which Citic has been ordered by the securities regulator to sell.

Fortune Securities ranked 61th among Chinese brokers last year.

Citic Securities International Co, based in Hong Kong, had assets of 5.17 billion yuan ($757 million) at the end of last year. Profit at the division more than tripled in 2009, to 181.3 million yuan, according to Citic Securities's annual report.

Citic Securities's planned $1 billion cross-investment with Bear Stearns Cos fell apart in March 2008 as the Wall Street firm teetered on the brink of collapse and was forced to sell itself to JP Morgan Chase & Co.

Walker and Coull

CLSA was initially created as a venture between Hong Kong retail brokerage Winfull Securities and the UK stockbroker Alexanders Laing & Cruickshank Securities in 1986. Laing & Cruickshank hired journalist-turned stockbroker James Walker to set up an institutional brokerage for the venture. Walker was later joined by Gary Coull, his former journalist colleague.

Laing & Cruickshank was acquired by Credit Lyonnais in October 1987. Credit Lyonnais Securities Asia was formed in 1990 after it was separated from the venture with Winfull, and focused on wholesale broking in the region.

Walker died of cancer in 2004, at the age of 55. The same disease claimed Coull, then 52, two years later. CLSA's management and staff now own 35 percent of the company.

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