Citigroup seeks higher China investment quota

By Brian Kelleher and Jack Reerink

BEIJING (Reuters) - Citigroup Inc. (C.N: Quote, Profile, Research, Stock Buzz), the world's most valuable bank, has applied to raise its Chinese securities investment quota as it seeks to strengthen its foothold in the mainland's developing capital markets.

Citigroup already has a Qualified Foreign Institutional Investor (QFII) quota of US$550 million to invest in Chinese stocks and bonds, and the bank is keen to raise that amount, China Chief Executive Richard Stanley told the Reuters China Century Summit in Beijing.

"The QFII business has been very successful. We have the second-largest quota right now, and we'd love to increase that," Stanley said, declining to give the application amount.

The New York-based financial services giant, which plans to add three China outlets in coming months for a total of 15 locations, also wants to play an active role in China's fledgling securities markets.

"I would look forward to the opportunity to participate in the domestic securities business," Stanley said when asked about the potential of setting up a securities joint venture, but he declined to go into further detail.

Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) have struck partnerships in the mainland securities industry, but Beijing put a hold on granting any new licenses late last year.

Citigroup, which has a market value of US$244 billion, is part of a group including Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) and JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) that does not want to be left out of the securities sector.

The bank, which will be allowed to sell local currency products to Chinese individuals when the market opens up under WTO obligations in December, has put high hopes on its retail banking operations, from mortgages and consumer loans to funds.  Continued...