(Yicai) Sept. 8 -- Chinese regulators have given the green light to China International Capital Corporation’s proposed acquisition of two smaller rivals, clearing the way for the creation of the country’s sixth brokerage with assets of more than CNY1 trillion (USD140.5 billion).

The China Securities Regulatory Commission approved CICC’s share-swap merger with Dongxing Securities and Cinda Securities, the Beijing-based firm announced late yesterday. The deal will see CICC issue just over 3.1 billion new Chinese mainland-listed shares to absorb the two firms, which will be dissolved and delisted.

The merger forms part of a broader push to consolidate China’s securities sector and create larger investment banks able to compete globally. Guotai Junan Securities and Haitong Securities merged in March last year to become the country’s largest brokerage, with assets of nearly CNY2 trillion.

CICC first announced its three-way merger plan last November, saying the deal would make it a world class investment bank as well as offering economies of scale and business synergies. Each of the three is controlled by Central Huijin Investment, a unit of sovereign wealth fund China Investment Corporation.

In separate filings yesterday, the trio also said their shares will be suspended from trading on Sept. 15. Dongxing and Cinda will not resume trading and will proceed to delist from the stock market. 

CICC’s shares [SHA: 601995] closed down 2.6 percent at CNY32.58 (USD4.86) each in Shanghai today, while its Hong Kong-listed stock [HKG: 3908] slumped 7.5 percent to finish at HKD19.86 (USD2.53). Dongxing [SHA: 601198] lost 4.7 percent to CNY13.34, and Cinda [SHA: 601059] gave up 3.8 percent to CNY16.40.

As of June 30, CICC had total assets of CNY997.2 billion (USD148.59 billion), up 27 percent from the end of last year, Dongxing had CNY132.6 billion, up 16 percent, and Cinda had CNY120.3 billion, down 7.5 percent.

CICC’s first-half net profit soared 89 percent to CNY8.199 billion from a year earlier after operating revenue jumped 51 percent to CNY19.3 billion. Dongxing’s profit was CNY672 million (USD100 million) in the period, up 53 percent, as revenue almost doubled to CNY1.59 billion. Cinda’s profit tumbled 21 percent to CNY645 million, though revenue rose 25 percent to CNY1.34 billion.

Editor: Tom Litting