RBS to launch investment bank operations in China
Royal Bank of Scotland is launching an investment banking push in China in an effort to cash in on the Beijing boom.
Stamp of appproval: RBS is the first UK bank to get the nod to carry out investment banking activities in China
In the longer term it hopes to open branches of the Queen's bank Coutts, which it owns, in the People's Republic but has no immediate plans because of restrictions on foreign operators.
Coutts already has offices in Hong Kong and Shanghai.
The new investment banking operation is a joint venture along with China's Guolian Securities to be known as Hua Ying.
The Edinburgh-based bank will have a 33% stake in the venture, which aims to manage stock market floats, share sales and debt issues in China's rapidly growing financial markets.
John McCormick, the chief executive of RBS Asia, said the venture could also help UK firms tap into China's deep pool of capital.
The move has also led to speculation that the bank may be lining up Asian sovereign wealth investors to take stakes when the UK government starts selling its 83% holding in the bank.
This process is expected to begin in 2012.
Middle Eastern sovereign wealth funds are also thought to be in the sights of the government as it looks to offload its stake.
The new investment banking operation will be based in Wuxi in Jiangsu Province, around two hours from Shanghai. Hua means 'Chinese.' and Ying means 'British.'
RBS, which is the first UK bank to gain approval for carrying out investment banking activities in China, said it has no plans to reenter the retail banking market.
Sir Fred Goodwin was accused by a City analyst of being a 'megalomaniac' when he bought a stake in Bank of China for £900m. It turned out to be one of his less disastrous moves and was sold for £1.6bn in 2009 after the downfall of RBS in the credit crisis.
McCormick said: 'You can see America and Europe have gone flat and you can see Asia increasing. We want to become a bigger part of the bigger pie.'
Banks are clamouring for a slice of the lucrative Chinese. market, which last year accounted for around twothirds of global share floats with companies raising a record $70bn.
Separately, suitcase maker Samsonite, backed by private equity firm CVC Capital Partners, set an indicative price range of HK$13.5 to HK$17.5 for its $1.5bn float on the Hong Kong stock market.
It follows companies such as beauty brand L'Occitane and fashion retailer Prada that are looking to raise their profile among Asian consumers or to raise capital from investors in the region.
In the UK luxury goods retailers such as Burberry have seen their shares rise strongly thanks to booming sales to nouveau riches Chinese.
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