Morgan Stanley buys bank, gets China licence
SHANGHAI/SINGAPORE, OCT 2: Morgan Stanley, the world’s largest securities firm by market value, said it acquired Nan Tung Bank, China, giving it a commercial banking licence in China from which it can apply to do business in the local currency and offer new products, including mortgage-backed securities.
The acquisition, approved by China Banking Regulatory Commission, will enable Morgan Stanley to apply for a licence to offer yuan- denominated services in the world’s fastest-growing major economy.
The commercial banking license currently enables Morgan Stanley to offer foreign -currency denominated services, including deposits, mortgage loans, and trade finance to individual and corporate customers based primarily in the Pearl River Delta region of Guangdong Province, the New York-based firm said on Monday.
‘‘Nan Tung Bank is a good strategic fit for our China business,’’ Wei Christianson, chief executive officer of Morgan Stanley in China, said in an e-mailed statement. ‘‘This platform will allow us to provide a wider array of new product capabilities that are currently being offered only by commercial banks with a presence within China.’’
Zhuhai-based Nan Tung Bank, formerly funded by a Macau-based unit of Bank of China, is now a wholly owned subsidiary of Morgan Stanley, the US firm said, without giving details on pricing. Nan Tung Bank, which has only one branch and fewer than 40 employees, serves customers mainly from Hong Kong and Macau.
By fully acquiring Nan Tung, Morgan Stanley will be eligible to apply for a local-currency license immediately, rather than wait for five years had it started operations in China from scratch. Morgan Stanley can also apply to offer derivatives and foreign-exchange products to local and overseas clients based in the world’s mostpopulous nation.
‘‘That’s the right thing to do but you’d need to get the products past the regulator,’’ said Roman Scott, a Singapore-based partner at Boston Consulting Group Inc. ‘‘Everyone would love to do structured products or derivatives if they were allowed to do so in China, if the markets were stable enough to do it.’’
Rivals including Goldman Sachs Group Inc and UBS AG have bought minority stakes in Chinese lenders, which won’t help them win banking licenses to offer services on their own.
Still, a ban by the China Securities Regulatory Commission last month on international securities firms from buying stakes in local brokerages has blocked a route for Morgan Stanley’s expansion in China.