China Weighs Giving Wall Street Investment Banks Greater Mainland Access (BUT IS IT TOO LATE?)

The move is being discussed as part of a new U.S.-China trade and investment framework. Firms such as Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. potentially could operate investment-banking business in China on their own. Currently, the firms must pair with domestic brokerages in joint ventures.

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Any change, however, would come at a late stage. China's banks have large balance sheets and have become formidable rivals. The banks also have long relationships with corporate Chinese clients, some of whom may not recognize Western brand names.

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Chinese banks had a 10% share of investment-banking revenue in Asia, excluding Japan and Australia, a decade ago, according to data provider Dealogic. This year, that share has increased to 61%, boosted by Chinese companies that prefer to do business with domestic firms.

Although U.S. banks have spent heavily to bulk up operations in the region, their share has declined since 2000, from 43% to just 14% so far this year, according to Dealogic.

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Still, joint-venture profits have been thin. Although some revenue from the joint ventures may be counted in global operations, eight foreign investment-banking joint ventures collectively eked out profits of just $116 million in 2015 and $38 million in 2014, on revenue of $664 million and $493 million, respectively, according to the Securities Association of China. By contrast, Goldman Sachs alone last year reported world-wide pretax profit of $8.78 billion on $33.82 billion in revenue.