"Looking at the history of global investment banking, internationalization is the inevitable path to becoming a top-tier investment bank," said Ge Xiaobo, President of Guolian Minsheng Securities (GLMS SEC), in a recent interview.
Ge emphasized that Chinese enterprises going global have evolved from simple market expansion to participating in global governance and shaping new international relations. As financial intermediaries serving the real economy, the internationalization of securities firms is not only about enhancing their own competitiveness but also a critical step for China's financial system to integrate globally and contribute Chinese wisdom.
**Internationalization: A Necessity for Building Top Investment Banks** Ge believes that the securities industry's expansion overseas is a core measure in response to China's strategy of building a strong financial sector and an essential path to establishing top-tier investment banks. To truly create globally influential investment banks, it is crucial to build a multi-layered and competitive industry pyramid—with two or three comprehensive top-tier investment banks at the top and over a dozen quasi-top-tier firms excelling in niche areas. Therefore, building top investment banks is not the mission of a few institutions but a shared goal for the entire securities industry.
The globalization of Chinese enterprises has created vast opportunities for domestic securities firms. Ge noted that as China undergoes industrial upgrading and supply chain restructuring, companies are shifting from trade exports to full industrial chain deployment, driving demand for cross-border M&A, overseas listings, and global bond issuance.
Meanwhile, China's capital market is deepening its two-way opening, providing policy pathways for securities firms' internationalization. Initiatives like the Belt and Road and global development frameworks have injected new momentum into international financial cooperation. From the refinement of QFII and RQFII mechanisms to the expansion of Stock Connect programs, China's capital market has progressed from pipeline-style opening to institutional and comprehensive opening.
**Three Mature Models of Global Investment Banks** Ge highlighted three successful models among global investment banks: 1. **Deal-Driven Investment Banks**: Exemplified by Goldman Sachs and Morgan Stanley, these firms leverage top-tier research and client resources to specialize in M&A, IPOs, and structured financing, building differentiated advantages through a project-based approach. 2. **Universal Banking Model**: Firms like Citigroup, HSBC, and JPMorgan Chase integrate commercial and investment banking, using low-cost deposits and credit resources to support underwriting and M&A while enhancing capital efficiency through securitization and bond underwriting. 3. **Boutique Investment Banks**: Specialized firms like Evercore and Lazard focus on verticals (e.g., healthcare, energy) or niche services (e.g., hostile takeover defense, family office solutions), while tech-driven players like Citadel excel in quantitative market-making and algorithmic trading.
**Syncing Internationalization with Industrial Globalization** Ge stressed that while learning from global peers is important, Chinese securities firms must chart their own path by leveraging domestic advantages. For instance, CITIC Securities accelerated its internationalization through its 2011 H-share listing and acquisition of CLSA, boosting cross-border capabilities and raising overseas revenue to 15–20%.
However, gaps remain in cross-border services. Some firms have had to divest underperforming overseas assets, reflecting higher demands for capital strength, talent, and risk management in international operations.
Ge outlined three keys to internationalization: 1. Aligning with China's industrial globalization to serve the real economy. 2. Offering differentiated global asset allocation insights from a "China perspective." 3. Building "tech + finance" competitiveness to overcome geographical barriers.
**Policy Recommendations for Growth** Ge proposed three policy enhancements to support internationalization: 1. **Improving Top-Level Design**: Strengthening cross-border regulatory coordination. 2. **Optimizing the Policy Environment**: Facilitating overseas subsidiary funding and foreign exchange management. 3. **Encouraging Overseas M&A**: Providing guidance for securities firms to pursue strategic acquisitions, accelerating global competitiveness.
"Funding overseas subsidiaries has a strong multiplier effect—every yuan invested can help Chinese enterprises raise 10 or even 100 yuan," Ge noted.
Comments