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Nomura Set to Buy GE Capital Unit in China

(Reuters) – Nomura Holdings is set to buy a China unit of GE Capital, in a deal allowing Japan’s largest brokerage to expand deeper into the Chinese financial market.

While Nomura has had a presence in China for around three decades, the purchase of the GE unit would put the Japanese bank in a stronger position to drive securities transactions there.

The bank currently has representative offices in Beijing and Shanghai, allowing for contact with clients and regulators.

Acquiring the GE consumer finance business will allow Nomura to offer yuan-denominated products to local investors, according to the Wall Street Journal, which first reported the tie-up.

The paper added that Nomura was also still seeking a securities joint-venture partner to allow it to underwrite stock and bond transactions in China, where rivals such as Goldman Sachs and UBS already operate securities joint ventures.

Underwriting securities in China is the long coveted goal of non-Chinese investment banks, given the rapid speed of China’s economy, future growth projections and fee potential. Big profits at foreign banks in China, however, have proven hard to grasp, thanks to several factors, including intense and growing competition from local competitors.

Nomura purchased the Asia and European Lehman Brother’s business in 2008 following the Wall Street bank’s collapse. That deal gave Nomura the opportunity to broadly strengthen its presence across Asia and the world through Lehman’s investment banking division, among other units.

Nomura was clear in stating that part of its planned expansion after the Lehman acquisition would focus on gaining more access and licenses in China.

However, the GE deal and any other securities joint venture Nomura pursues is at the mercy of China’s regulators, namely the China Banking Regulatory Commission.

The CBRC often conducts a long and deliberate review and approval process that can sometimes take more than a year before a transaction is allowed to go through.

The status of a CBRC approval for the Nomura-GE Capital deal, and the price of the offer, was not immediately clear.

Nomura declined to comment. GE Capital was not immediately able to be reached.

(Reporting by Tim Kelly; Editing by Edmund Klamann and Michael Flaherty)