J.P. Morgan (JPM.NYSE) will set up a mainland securities joint venture with First Capital Securities, a small state-owned domestic brokerage, the Financial Times reported. Under the deal, which is subject to regulatory approval, the US investment bank would take a 33% stake in the joint venture with First Capital holding the remainder. Through the joint venture, J.P. Morgan would be able to underwrite initial public offerings on the Shanghai and Shenzhen exchanges, but not trade stocks. Goldman Sachs (GS.NYSE) and UBS (UBS.NYSE, UBSN.SIX) were the only global banks able to set up full-service securities joint ventures before the government blocked foreign investment in the sector. Since then European banks including Deutsche Bank (DB.NYSE, DBK.FWB) and Credit Suisse (CS.NYSE, CSGN.SIX) have won approval for joint ventures, although these are restricted to underwriting. The likes of Morgan Stanley (MS.NYSE), Bank of America Merrill Lynch (BAC.NYSE, 8648.TYO) and Citigroup (C.NYSE, 8710.TYO) have all been looking to reach similar arrangements.
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