By Selena Li
HONG KONG (Reuters) – DBS Group (OTC:) Chief Executive Officer Piyush Gupta said on Wednesday the company was in the process of increasing its stake in its Chinese joint venture from 51% to 91%.
The comments came a day after China took decisive action to shore up its struggling economy and capital markets.
Singapore’s largest bank by assets confirmed it is the buyer of a stake put up for sale by its Chinese joint venture partners, although the deal is still pending regulatory approval.
The bank plans to maintain a 91% stake in the platform as it believes its Chinese partners add value to the business, Gupta told reporters at a briefing in Hong Kong.
DBS is the latest in a series of foreign banks, such as JP Morgan and Morgan Stanley, that have taken steps to boost their stakes in securities joint ventures in China, taking advantage of the country’s foreign equity cap.
Four Chinese shareholders of DBS Securities China sold a combined 40% stake in the joint venture in July for a starting price of 408 million yuan ($58.15 million), according to the Shanghai United Assets and Equity Exchange.
Since then, there has been no modern information about buyers or share transfers.
The decision to augment the shares of the Chinese unit was made in the face of an economic slowdown and a frail market, which has narrow the profitability of securities companies operating in China.
However, stimulus measures announced by Beijing on Tuesday improved the outlook for securities companies, with shares of Hong Kong-listed brokerages rising in morning trading.
China’s central bank said it was launching a swap program with an initial value of 500 billion yuan ($71.24 billion) that will give funds, insurers and securities brokers easier access to financing to buy shares.
“I am confident that these monetary stimulus measures, as well as support for the housing market… will be enough to re-energize and (restore) confidence,” Sebastian Paredes, the bank’s head of North Asia and chief executive of Hong Kong, told a news conference.
(1 dollar = 7.0165 renminbi)
(1 dollar = 7.0182 Chinese yuan)
