Stocks News
- Barclays allowed to buy stake in trust firm
Date: 26-Jul-2007 Sources: (Shenzhen Daily)
BARCLAYS has won regulatory approval to buy into a domestic trust company, securing a foothold in the country's fast-growing asset management sector, two sources familiar with the situation said yesterday.
London-based Barclays Bank Plc. will be allowed to buy a nearly 20 percent stake in New China Trust & Investment Co., one of the country's oldest trust firms, after negotiations for more than one year between the two companies, the sources said.
The purchase will make Barclays the first foreign bank with a stake in a domestic trust firm, while others, including Morgan Stanley and UBS, are still in talks with potential Chinese partners.
'The deal will allow Barclays to offer wealth management services and financial derivative products to Chinese clients through New China Trust's licenses and network,'said one of the sources, who declined to be identified.
'It's not a very expensive deal but it brings a very good platform to Barclays in China,'he said. He declined to comment further on the financial details of the deal.
New China Trust manages assets worth more than 7 billion yuan (US$926 million) and has registered capital of 500 million yuan.
New China Trust can help domestic companies to underwrite corporate bonds and can help institutional investors, especially State-owned enterprises, to invest in domestic stocks.
After the purchase, Barclays will be the second-largest shareholder in New China Trust and will appoint representatives to the board of the company, which is controlled by a domestic investment firm with more than a 50 percent stake, the sources said.
Barclays will have the option to increase its stake in New China Trust to just under 50 percent if and when the government lifts its investment cap for foreign firms, the sources said.
A single foreign investor is allowed to buy no more than a 20 percent stake in a domestic trust company, while foreign investors can own a combined stake of up to 25 percent.
Neither Barclays nor New China Trust could immediately be reached for comment.
China has been moving since late last year to bolster the trust company sector, which was hit over the past decade by bankruptcies and scandals at several firms, and approved their participation in an overseas investment program in April.
New China Trust is a founding and controlling shareholder of New Century Fund Management Co., which could allow Barclays indirect access to China's red-hot fund sector, the sources said.
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