Goldman Sachs official denies talk of acquisition

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Last updated at: (Beijing Time) Tuesday, January 13, 2004

Goldman Sachs official denies talk of acquisition

Goldman Sachs Monday dismissed a report on its acquisition of China Southern Securities prior to the Chinese regulator's taking-over of the scandal-plagued firm.

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Goldman Sachs Monday dismissed a report on its acquisition of China Southern Securities prior to the Chinese regulator's taking-over of the scandal-plagued firm.

"We have not acquired China Southern Securities, nor have we formed any joint venture securities house in China,'' Mei Zhang, executive director of corporate communications at Goldman Sachs (Asia), told China Daily yesterday.

"Any such talk is entirely fabrication.''

A report over the weekend in the Economic Observer newspaper indicated Goldman Sachs had formed a joint venture securities house with Hainan Securities, and that they had, together with another company, acquired the debt-ridden securities firm before January 2 when it was taken over by regulators.

"We do have a plan to launch a joint venture securities company in China, and we have been negotiating with numerous potential partners,'' Zhang said.

"But the plan is not finalized, and no substantial move has been made.''

Reports of the acquisition of another securities house, therefore, would be groundless, she added.

Officials with China Southern Securities also denied the rumours.

"We have not heard of the plan of a foreign take-over,'' a spokesman of the Shenzhen-based brokerage said.

China Southern Securities' one of China's biggest brokerages, but which has been troubled by heavy debt and irregular management practises' is now in the hands of the China Securities Regulatory Commission and Shenzhen's municipal government.

Regulators said they took control of the firm because its financial status was deteriorating and the company did not have a rescue plan.

Analysts suggested the move will help the nearly bankrupt firm stay in business, and will ensure the financial market's stability.

A special management team has been created to ensure the company continues to operate as normal.

The team is being led by Niu Guanxing, chairman of the China Merchants Fund Management Co and former president of the China Merchants Securities Co.

Niu has ensured clients the guarantee fund is safe, and that the company's normal business operations will continue.

Analysts predict regulators will not maintain control of the firm for long, but will have to find a way to cope with the debt.

That will include finding the right managerial team.

Acquisition by a securities company or a capital injection by the central government could be likely, insiders said.

"There will be an increasing number of mergers and acquisitions in the industry in the next few years to improve efficiency,'' predicted Dong Chen, an analyst with China Securities Co.

"That is the only way the firms will be able to survive in the increasingly intense competition as foreign companies muscle in.''

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