Banks to list brokerage arms

China Merchants Securities and Everbright Securities have applied to become the first brokerage arms of domestic banks to go public, the Shanghai Securities News reported. Both are planning to list by the end of this year to take advantage of the bullish market, the newspaper said. China Merchants Securities reported a net profit of US$319.57 million (RMB2.4 billion) in the first six months of the year, well up on the full-year profit for 2007 of US$146.47 million (RMB1.1 billion). It has US$2.61 billion (RMB19.6 billion) worth of assets and 52 branches nationwide. The Shenzhen-based broker expects to raise between US$798.93 million and US$1.33 billion (RMB6 billion to RMB10 billion) on the Shenzhen Stock Exchange. Everbright Securities will issue 520 million shares on the Shanghai Stock Exchange to raise at least US$1.99 billion (RMB15 billion). The Shanghai-based broker said its first-half pre-tax profits skyrocketed 900% year-on-year to US$432.76 million (RMB3.25 billion) in the first six months; its revenue was up 553% year-on-year to US$620.51 (RMB4.66 billion). The Chinese stock regulator has been encouraging premium brokerages to go public to expand capital and improve corporate governance before the sector is fully deregulated and opened to foreign competition. Domestic brokerage houses Citic, Haitong, Hong Yuan, and Northeast Securities have already listed.