Citi expects China brokerage license approval this month: sources

Key facts

• Citigroup expects to receive regulatory approval for its wholly-owned China brokerage business as soon as this month.
• The bank plans to add several dozen staff to the unit, aiming for a total headcount of around 100 by year-end.
• Citi applied for the license in late 2021 as part of its strategy to expand in China.
• The new unit will offer A-share brokerage, underwriting, research, and principal trading services.
• The expansion will see Citi competing with established Wall Street rivals and dominant Chinese brokerages.

Citigroup is anticipating regulatory approval for its wholly-owned China brokerage business as early as this month, according to sources familiar with the matter. The U.S. bank plans to significantly expand its staff in the unit, aiming to roughly double its headcount to around 100 people by the end of the year. This move is part of Citigroup's broader strategy to increase its presence in China's financial sector.

The expected regulatory nod comes as China continues to open its financial markets to foreign firms, despite ongoing geopolitical tensions between the U.S. and China. Citigroup applied for the brokerage license in late 2021 and has been preparing for its launch by hiring staff over the past couple of years. The new unit will seek approval to conduct A-share brokerage, underwriting, research, and principal trading.

Upon receiving approval, Citigroup will compete with established Wall Street rivals such as JPMorgan, Goldman Sachs, and Morgan Stanley, which have already seen substantial profits from their China operations. The bank intends to leverage its existing onshore corporate and commercial banking client base to secure A-share equity and M&A mandates, focusing on sectors like technology, healthcare, consumer, and financial institutions.

This expansion by Citigroup occurs at a time when Chinese technology and other companies are increasingly tapping domestic equity markets for fundraising. The move also aligns with Citigroup CEO Jane Fraser's push for stronger profitability targets.