Guotai Junan to Absorb Haitong Securities in a Stock Swap Creating China's Biggest Brokerage

China will combine Guotai Junan Securities and Haitong Securities to create a state-backed megabrokerage with 1.68 trillion yuan (US$236.9 billion) in total assets, part of a government-led push to make the nation's financial services sector competitive with Wall Street. The plans were disclosed in separate statements from the two brokerages, linked to Hong Kong Stock Exchange filings dated 5 September 2024.

How the merger is structured

Guotai Junan plans to absorb Haitong in a stock swap. Under the announced structure, shares will be issued to holders of Haitong's yuan-denominated A shares and Hong Kong-listed H shares, bringing both classes of Haitong equity into the combined company. The statements did not give a completion date for the transaction.

If combined, the new firm will surpass Citic Securities as China's biggest brokerage in both total and net assets, according to Huachuang Securities. That would displace the current leader at the top of the country's securities industry.

Common owner and required approvals

Guotai Junan and Haitong are both owned by Shanghai's state-owned asset administrator, which places the combination within a government-led consolidation of the financial services sector rather than a market-initiated takeover. The merger is pending approval from the companies' boards and shareholders, as well as regulatory authorities.

• The boards of Guotai Junan Securities and Haitong Securities
• The shareholders of both companies
• Regulatory authorities

Until those approvals are obtained, the announced combination remains a plan disclosed to the market, and the merged entity with 1.68 trillion yuan in total assets — roughly US$237 billion — has not yet been formed.

Company details

Guotai Junan Securities, the absorbing company in the announced stock swap, is a state-backed Chinese brokerage owned by Shanghai's state-owned asset administrator. Company information: Guotai Junan Securities. Haitong Securities, the company to be absorbed, has yuan-denominated A shares and Hong Kong-listed H shares and is owned by the same Shanghai administrator. Announcement source: South China Morning Post, 6 September 2024.