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Financials

Japan's Daiwa expects to make China comeback as early as this year

TOKYO, May 21 (Reuters) - Japan’s Daiwa Securities Group Inc expects to make a comeback in China as early as this year initially targeting the country’s huge market for investment banking, its chief executive said.

The brokerage and investment bank retreated from China in 2014 where it owned 33% of a joint venture with a local partner, having failed to control significant market share as the scope of business was limited.

China has since overhauled regulations to grant foreign institutions greater access to its financial sector, including allowing such firms to own majority stakes in joint ventures.

With growth near-stagnant at home, Japan’s finance houses have been seeking opportunities abroad. In September, Daiwa applied to establish a majority-owned venture in China and is awaiting regulatory approval.

“Approval might be delayed into next year due to the coronavirus outbreak but I expect to start business this year if all goes well,” Chief Executive Seiji Nakata said in an interview.

“We have about 500 M&A bankers worldwide and established a global network in the field, so it could be easier for us as a first step to enter the mergers-and-acquisitions market,” said Nakata, adding China’s investment banking market has much potential in the long term.

Last year, bigger domestic peer Nomura Holdings Inc received approval to launch a majority-owned joint venture in China, while SMBC Nikko Securities plans to establish a wholly owned company in the country.

Reporting by Takashi Umekawa and Takaya Yamaguchi; Editing by Christopher Cushing

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