The intensifying trade tensions between the United States and China could prove a stumbling block for American banks looking to capitalize on China’s ongoing reforms to its financial sector, the Financial Times reports.
Beijing relaxed restrictions on foreign ownership of securities trading and fund management companies in April, which has prompted a number of banks to rush to take control of their operations in China. Taking a 51% stake in their China joint ventures is viewed as important because it gives banks full control of recruitment, IT systems and compliance checks, according to the FT.
Three firms have already applied to take control of their joint ventures, namely UBS of Switzerland, Japanese bank Nomura and the US’s JPMorgan Chase.
However, other US banks looking to do the same may find that there are delays in the approval process due to the ongoing trade issues, sources in the financial sector told the FT.
“Given the tensions between the US and China, I have a question of whether the US banks will ever be that strong in China,” said Frédéric Oudéa, chief executive of Société Générale. “We are in a world where everyone is trying to show their muscle.”