JPMorgan is reportedly in talks to sell out its stake in First Capital Securities joint venture. The banking company has a 33 percent stake in the joint venture.

The development may lead to the first instance of a top global investment bank exiting the Chinese securities market. However, the company has said that the move does not signify its retreat from the country.

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The revelation was made in a regulatory filing submitted by First Capital Securities of Shenzhen. The Chinese company holds the majority stake in joint venture. JPMorgan has been embroiled in controversies. The banking company is currently nearing a settlement of a three-year investigation related to the hiring of Chinese officials' progenies. It is alleged that the banking company employed discriminatory tactics to win business. 

JPMorgan confirmed the news that it is negotiating an exit from the joint venture. The company stated that China remains a key market for JPMorgan. It also stated that it is optimistic about the long-term opportunities provided by the country. The banking company's stake is likely to be bought by First Capital Securities. However, the deal has not been finalized yet. The companies also did not provide any financial details.

Growing domestic competition is believed to be the main reason behind the exit. Major investment banks form a joint venture with local Chinese companies for securities business and hold a minority interest. However, such minority interest results in a lack of control. The revenue generated by such joint ventures is also generally minuscule.

Various other banking companies such as Morgan Stanley, Credit Suisse, Goldman Sachs Group and UBS Group also have such JVs. 

Tagsjpmorgan, Morgan Stanley, First Capital Securities of Shenzhen