Bulletin: Huatai Securities' Capital Gains From Unit Sale To Boost Its Capitalization

HONG KONG (S&P Global Ratings) April 26, 2024--Significant capital gains from Huatai Securities Co. Ltd.'s proposed disposal of a U.S. subsidiary will strengthen its capital base. The company estimates the transaction could yield pre-tax gains of about US$795 million if it is executed smoothly this year. This amount is about 40% of Huatai's pre-tax profit in 2023. We believe the sale of AssetMark Financial Holdings Inc. will strengthen capital headroom for Huatai (BBB+/Stable/A-2). We expect the China-based company to use the cash to further develop its overseas operations and capital-light business driven by client needs. Huatai's risk-adjusted capital ratio stood at about 18% as of end-June 2023. The transaction comes at a time when securities firms are finding it difficult

...April 26, 2024 HONG KONG (S&P Global Ratings) April 26, 2024--Significant capital gains from Huatai Securities Co. Ltd.'s proposed disposal of a U.S. subsidiary will strengthen its capital base. The company estimates the transaction could yield pre-tax gains of about US$795 million if it is executed smoothly this year. This amount is about 40% of Huatai's pre-tax profit in 2023. We believe the sale of AssetMark Financial Holdings Inc. will strengthen capital headroom for Huatai (###+/Stable/A-2). We expect the China-based company to use the cash to further develop its overseas operations and capital-light business driven by client needs. Huatai's risk-adjusted capital ratio stood at about 18% as of end-June 2023. The transaction comes at a time when securities firms are finding it difficult to raise capital from the stock market. In our view, Huatai terminated its Chinese renminbi (RMB) 28 billion share placement plan in 2023 partially due to weak market conditions. AssetMark is a top-three...

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