Credit Suisse’s China Business Is Up For Grabs From Citadel Securities

(CTN News) – Citadel Securities bid about RMB2 billion ($280mn) for Credit Suisse’s Chinese securities business.

The market maker’s China presence could expand substantially if the non-binding offer made last month is successful. Apparently, a Chinese company has made a rival bid.

When Credit Suisse collapsed last year, UBS took control of its investment banking and brokerage services unit.In mainland China, UBS already operates a securities unit, so it cannot hold two licenses.

Citadel Securities is licensed as a foreign institutional investor in Credit Suisse Chinese markets, but not as an underwriter or broker in Shanghai and Shenzhen. The process of obtaining such a license can take years.

According to Andrew Collier, managing director of Orient Capital Research in Hong Kong, breaking into the highly competitive and politically charged Chinese market is a highly risky bet. “However, it allows them to sit at the table for not much money.”

The bid was first reported by Bloomberg.Neither UBS nor Citadel responded to requests for comment.

Citadel Securities is expanding its China Credit Suisse footprint as global investors steer clear of the country’s underperforming stock market. The benchmark CSI 300 index finished 2023 down more than 11 percent, with 90 percent of foreign inflows to Chinese equities returning.

Griffin, however, has been relatively optimistic about investing there. During an interview with the Financial Times in June, he explained that China’s story is the unbelievable size of the market and innovation.

Last year, Citadel Securities and Citadel, the hedge fund owned by Griffin, opened offices in Tokyo. The China deal price could change depending on the company’s assets, a source said.

A reform by China’s regulators allowed international banks to have full control over their mainland units in 2020, enabling Credit Suisse to take a majority stake.

Chinese regulators approved Citigroup’s wholly owned mainland investment bank earlier this month.

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