Hangzhou Industrial and Commercial Trust Co., Ltd. and Morgan Stanley has inked a cooperation agreement, under which, the former will sell a 19.9% stake to the latter.
After the deal, which costs CNY 200 million (USD 29 million), Morgan Stanley is to appoint two directors into the Chinese trust firm. Also, the foreign side has the right to appoint CEO at Hangzhou Industrial and Commercial Trust.
Earlier, there was a story saying that China Banking Regulatory Commission, who administrates local trust firms, had granted go-ahead for the deal, but insiders from Hangzhou Industrial and Commercial Trust declined to give more details.
Several other foreign giants now are chasing Chinese trust and investment companies. These institutions include the Royal Bank of Scotland, who wants to become the foreign investor of Suzhou Trust; Macquarie Bank, who expects to make investments into Kunming Trust in southwest China’s Yunnan Province; and the British financial giant HSBC, who hopes to establish partnership with Beijing-based National Trust.
Not long ago, British lender Barclays Bank was said to buy a 19.99% stake in Chongqing-based Chinese trust firm called New China Trust Co., Ltd before this yearend.
As early as the start of 2007, Barclays Bank had been reported to eye a 49% stake in New China Trust, but the plan failed due to China’s banking policies which limit a single foreign institution’s ownership in a Chinese trust firm at not more than 20%. Later, the foreign buyer was said to cut the stake down to 19.99%.
Compared with banking, securities and insurance, the trust sector is relatively smaller in size, thus Chinese financial authority is likely to further open up local trust sector first to allow a single foreign investor to take a more than 20% stake in the future. That is why Chinese trust firms can allure foreign institutional investors, experts believed. These foreign players are believed to take controlling rights in their Chinese partners when local trust sector is opened further.