China Securities Regulatory Commission has given the go signal for a Hong Kong bank to create a joint venture with a local securities firm.

The partnership between Hang Seng Bank, a subsidiary of HSBC, and Guangzhou Securities is the first of its kind under the Hong Kong Close Economic Partnership Arrangement with Mainland China, which was first signed in 2003 and in December 2011 was bolstered with an eighth amendment to liberalise and boost the economic status of Hong Kong. 

Under the terms of joint venture, Hang Seng Bank will hold a 33 per cent stake, while the remaining 67 per cent interest will be owned by Guangzhou Securities. According to Chinese laws, foreign companies may only own as much as 33 per cent of any joint venture listed in the country.

Hang Seng posted positive growth in 2011 with a 12 per cent increase year-on-year to HK$16.7 billion ($2.15 billion). This happened despite a volatile financial market affected by the ongoing European debt crisis.