Citic Securities Co., China’s largest brokerage by market value, and Credit Agricole SA’s Asian broking affiliate are in talks to create a venture in the region, said four people with knowledge of the matter.

The combined entity would include the Paris-based bank’s CLSA Asia-Pacific Markets, said the people, who declined to be identified because the talks are private. Citic Securities and Credit Agricole’s corporate and investment-banking unit would each own stakes in the venture, which may have assets valued at more than 1 billion euros ($1.4 billion), they said.
Teaming up with CLSA, rated Asia’s best brokerage in Asiamoney’s 2009 survey of institutional investors, would help Citic Securities reignite an expansion that faltered two years ago when it scrapped a planned partnership with Bear Stearns Cos. Citic Securities, whose parent is controlled by China’s cabinet, got 99 percent of operating profit from the country last year.
Jonathan Slone, chief executive officer of Hong Kong-based CLSA, declined to comment, as did Citic Securities spokesman Raymond Tang. It wasn’t clear what assets Beijing-based Citic Securities would transfer to the venture, or how much of it each company may own. The companies may announce an initial agreement next week, the people said.
Credit Agricole, France’s largest bank by branches, owns 65 percent of CLSA and the brokerage’s employees hold the rest. CLSA, founded in 1986, has more than 1,350 workers and focuses on equity and economic research, trading and asset management. It also advises on stock sales and mergers. CLSA grew its U.S. operations and opened a business in Australia since early 2009.
CLSA’s Chinese joint venture with Hunan-based Fortune Securities Co. won regulatory approval in June 2008 to trade shares in China, whose stock market is the world’s third-largest by capitalization according to Bloomberg data.
The Chinese venture, called Fortune CLSA Securities Ltd. is one-third owned by CLSA.
Citic Securities has ranked first or second every year since 2006 in underwriting stock sales in China -- a market only partially open to overseas firms -- data compiled by Bloomberg show.
The company’s brokerage unit was 14th last year in trading shares and mutual funds in the country, according to the Securities Association of China. That ranking excludes its 60 percent stake in China Securities Co., which Citic has been ordered by the securities regulator to sell.
The company’s overseas unit, based in Hong Kong and called Citic Securities International Co., had assets of 5.17 billion yuan ($757 million) at the end of last year. Profit at the division more than tripled in 2009, to 181.3 million yuan, according to Citic Securities’ annual report.
(Source: Bloomberg)