Orient Securities’ buyout of a smaller rival to create a new entity with at least 580 billion yuan (US$85 billion) in assets is a sign that the government-led consolidation of the brokerage industry is deepening, underscoring Beijing’s determination to cultivate bigger investment banks to take on global rivals.

In an exchange statement on Sunday night, Orient Securities said it planned to acquire 100 per cent of Shanghai Securities through the sale of new shares and cash, without disclosing the value of the deal. The buyout was still pending regulatory approvals, it said.

The move is the latest sign that financial regulators are pressing ahead with their drive to nurture world-class investment banks through mergers and acquisitions, a goal set by the China Securities Regulatory Commission. In recent years, the industry has witnessed a slew of high-profile deals, including a 103 billion yuan merger between Guotai Junan Securities and Haitong Securities to forge a new juggernaut.

A successful acquisition would lift Orient Securities by one place to rank 10th in the industry in terms of revenue and total assets, according to Sinolink Securities and Huatai Securities. Its total assets would rise to 583 billion yuan on a combined basis, they said.

“There have been a number of mergers since 2023 because of the policy support,” said Shu Siqin, an analyst at Sinolink Securities. “We still expect more brokerages to strengthen their competitiveness in the industry through outside mergers, and a further consolidation of the industry.”

Hong Kong-listed shares of Orient Securities surged by as much as 14 per cent before closing 0.8 per cent lower at HK$6.01 on Monday. The yuan-denominated stock of Orient Securities was suspended from trading in Shanghai, likely for no more than 10 days, pending further statements, after rising 0.7 per cent to 9.34 yuan on Friday. Shanghai Securities is unlisted.