SHANGHAI/Hong Kong (Reuters) - Societe Generale (PA:SOGN), France's third-biggest lender, has ditched a plan for a securities joint venture in China in favor of a wholly owned subsidiary, as Beijing said foreign ownership limits on the country's giant financial industry would be gone by the end of next year.
"As China further opens its markets, we will make further investments in China," Xin He, SocGen's head of global markets, China, told a financial forum over the weekend.
On the sidelines of the forum, organized by the CFA Institute, He told Reuters that the bank had dropped a joint-venture plan to avoid the hassle of future stake transfers.
International investment banks are only able to own 51% of their China operations. That requires a joint venture with local Chinese partners.
China's securities regulator unveiled a firm timetable on Friday to open up its financial industry, saying foreign ownership limits will be removed completely for the country's futures, mutual fund and securities sectors in January, April, and December next year respectively.
A SocGen spokesman in Hong Kong confirmed that the bank had postponed its plans for a local securities business in China until regulators announced more details, and emphasized the bank's commitment to China.
Response to the announcement from elsewhere in the financial industry has been mixed.
Fidelity International, which has been considering a wholly owned mutual fund business in China, said in an email that it would apply for a license eventually.
But Michael Lu, China General Manager of Eastspring Investments, a member of Prudential (LON:PRU) Plc (UK), cautioned that full ownership doesn't guarantee success in China's highly competitive mutual fund market. Local experience, partnerships and banks' sales networks are essential, he added.
Peter Alexander, Managing Director of fund consultancy Z-Ben Advisors, said China's timetable for opening at least provides a enough clarity that certain companies can move forward.
"The clock is now ticking and a large swath of firms will be concerned if a key competitor is among the very first in the official queue," Alexander said.