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Morgan Gets Foothold in China Market

October 03, 2006|From Reuters

HONG KONG — Morgan Stanley said Monday that it had acquired China's Nan Tung Bank, a deal that would give the Wall Street giant a coveted onshore commercial banking license in China ahead of U.S. investment bank rivals.

The deal, approved by the China Banking Regulatory Commission, allows Morgan Stanley to apply immediately to offer yuan-denominated products. It will also enable the U.S. bank to strengthen its China operation and offer a broader range of products and services.

Morgan Stanley did not disclose what it paid for the Zhuhai, China-based foreign-funded bank formerly owned by a Bank of China subsidiary.

The bank has a single branch with fewer than 40 employees and is allowed to deal only in foreign currencies including the U.S. and Hong Kong dollars.

Major investment banks are scrambling to get a foothold in China's fast-growing financial sector.

"We want to build the leading, fully integrated financial services firm in China, and the acquisition of Nan Tung Bank is another important milestone in our pursuit of that strategy," said John Mack, Morgan Stanley's chief executive.

Morgan Stanley has long had a leg up on most of its U.S. rivals in the Chinese market thanks to its 35% stake in investment bank China International Capital Corp., which it acquired in 1995. The stake gave Morgan Stanley the sole China joint venture among Wall Street banks.

Since rejoining Morgan Stanley in June 2005, Mack has made expansion in emerging markets a top priority, highlighting opportunities in Brazil, India and Russia, as well as China.

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