On Thursday, Bloomberg reported that JPMorgan Chase & Co. (JPM) is planning to open its sixth branch in China to meet the increased demand for overseas finance.
This was stated in an interview by Mr. Ben Shenglin, the head of the company’s wholesale banking unit in China. The new branch is expected to open in the Chinese city of Harbin.
JPMorgan provides advisory services as well as treasury and asset management to foreign companies with operations in China, many financial institutions, and local firms with foreign operations. The company’s primary aim is to tap the fast-growing Chinese market.
JPMorgan’s top priority is to arrange bond sales, provide dollar-denominated loans and grant trade finance to the various Chinese banks and firms that are planning to expand overseas. Since the People’s Bank of China increased the banks’ reserve requirements to 20%, the company expects to meet the growing demand for credit from overseas clients that have their operations in China.
Additionally, Mr. Ben also stated that JPMorgan’s global corporate banking unit in China had added 20 bankers since its inception last year. This unit primarily focuses on the credit demand of Chinese companies that are planning to expand overseas and have revenue of more than 3 million yuan ($457 million).
Furthermore in January, JPMorgan had received the approval from the China Securities Regulatory Commission (CSRC) for setting up securities businesses through joint venture (JV) with First Capital Securities Co. in mainland China. According to the Memorandum of Understanding singed between JPMorgan and First Capital in March 2010, JPMorgan will hold a 33% stake in the venture – the maximum allowed by the Chinese regulators.
Apart from JPMorgan, other major banks that have notable presence in China include Morgan Stanley (MS), Goldman Sachs Group Inc. (GS) and UBS AG (UBS).
With the Chinese market growing by leaps and bounds, the company’s plan to expand further in China will help it penetrate into the emerging Chinese market all the more.
Currently, JPMorgan’s shares maintain a Zacks # 3 Rank, which translates into a short-term ’Hold’ rating. Also, considering the fundamentals, we maintain our long-term ‘Neutral’ stance on the stock.
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