Guotai merges with Haitong

Guotai Junan Securities (2611) is set to merge with Haitong Securities (6837) creating China's largest brokerage.

The merger will be conducted through a swap deal where Guotai Junan issues A-shares and H-shares to all A-share and H-share exchange shareholders of Haitong Securities.

Hong Kong's securities watchdog has approved Guotai Junan Securities to become the major shareholder of certain subsidiaries of Haitong Securities which are licensed corporations.

In October, Shanghai-based Guotai Junan Securities announced details of its plan to merge with cross-town rival Haitong Securities in a share swap deal, a filing to the Shanghai Stock Exchange showed.

The merger of two state-backed brokerages to create a sector leader in China with US$230 billion (HK$1.78 trillion) in assets is part of Beijing's drive to consolidate the US$1.7 trillion industry in an increasingly challenging market and the move is set to gather pace, according to Reuters.

The combined entity will overtake Citic Securities (6030) as China's largest brokerage.

Both Haitong and Guotai Junan are controlled by companies running state assets for the Shanghai government.

Staff reporter and agencies