JPMorgan Chase & Co. is investing about $200 million to help set up a financial company to guarantee loans to small Chinese firms, a sector of China's economy that has traditionally struggled for access to credit from the country's banks.
The U.S. bank will be joined by the German industrial giant Siemens AG, the Chinese steelmaker Baosteel Group Corp., Export-Import Bank of China and a handful of other local investors, Chinese officials said in a statement. The new firm will have 5.1 billion yuan ($803.4 million) of capital, making it one of the biggest such companies in China, said the statement from the National Development and Reform Commission, China's economic planner.
JPMorgan Chase's investment will give it a 24.9% stake in the new firm, according to a person close to the deal.
China's banks have long been geared toward making large loans to major, state-controlled firms. But with the private sector accounting for about 80% of employment in China, the government is trying to rewrite that equation.
JPMorgan Chase will help the new firm with risk management, market expansion and product development, the statement said.
The person familiar with the deal said the U.S. bank would be a financial investor in the firm and have no role in its management.
