China plans to combine its largest state-backed brokerages, Guotai Junan Securities and Haitong Securities, as it consolidates its investment banks to better compete on a global level.

The combined brokers - which are both part-owned by Shanghai's state assets administrator - will have a collective 1.6 trillion yuan (US$230 billion) in assets under management, besting competitor Citic Securities.

The merger is pending approval from the companies' boards and shareholders, as well as regulatory authorities.

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Guotai issued a statement to the Hong Kong exchange on Thursday night saying it intends to merge with Haitong Securities by issuing A shares to all A-share exchange shareholders of Haitong, while issuing H shares to all H-share exchange shareholders of Haitong.

Guotai shares were suspended from trading when the market opened on Friday; the suspension is expected to last no more than 25 trading days.

Beijing is aiming to have 10 home-grown brokerages of a high calibre by 2029, and wants to nurture two to three firms to a global scale by 2035. Its ultimate goal is to create a financial environment that can compete with the likes of Wall Street investment banks.

This goal was outlined earlier in the year by the new chairman of the China Securities Regulatory Commission (CSRC), Wu Qing.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.

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