(Bloomberg) -- Citigroup Inc., the third-largest U.S. bank by assets, started an investment banking joint venture in China that will give it access to the world's second-biggest market for share sales.

Pan Xinjun, chairman of partner Orient Securities Co., will also head the venture's six-person board of directors, and Ma Ji will be chief executive officer, the New York-based bank said in an e-mailed statement today. Citi Orient Securities Co. is based in Shanghai and has registered capital of 800 million yuan ($126 million).

The world's third-biggest underwriter of equity sales this year has lagged behind rivals including Goldman Sachs Group Inc. and UBS AG in forming a venture in China. Chief Executive Officer Vikram Pandit is grappling with a revenue slump in trading and investment banking as the European sovereign-debt crisis roils markets and the global economy falters.

"This is the final piece of the jigsaw for the corporate investment bank in China," Stephen Bird, Citigroup's chief executive officer for Asia-Pacific, said at a briefing in Shanghai today. "I don't think we are a latecomer, this is still the beginning for China."

Tying up with a local firm is a prerequisite for arranging equity offerings in China, where companies raised 293 billion yuan from share sales and 2.7 trillion yuan from debt issuance in 2011, according to data compiled by Bloomberg. China had the second-highest value of equity sales last year after the U.S.

Ownership Limit

The country in May agreed to raise the ceiling on foreign banks' ownership in investment banking ventures to 49 percent from 33 percent, the U.S. said after annual talks, without saying when the change would happen.

Citigroup plans to increase its ownership to the maximum when allowed by the regulator, and Orient Securities agrees, Bird said. The third-largest U.S. bank now owns 33.3 percent in Citi Orient, with the rest held by the Chinese partner.

"We have very high expectations of this joint venture, our goal is for this to become a leading investment bank in China," Bird said, adding that the venture has about 200 bankers and a "very strong" pipeline of deals.

Shengman Zhang, Citigroup's co-chairman of Asia-Pacific operations and Farhan Faruqui, head of corporate and investment banking for the region, will represent the U.S. bank on the board, according to today's statement.

Domestic investment banks manage most stock and bond sales in China. UBS's China venture had 3.5 percent of the underwriting market for domestic equities last year, the most of any foreign bank, data compiled by Bloomberg show.

Citigroup, which plans to open its 50th outlet on the mainland tomorrow, is set to meet its target of 100 outlets in two to three years, and almost doubling its workforce to 12,000 from 6,500, Andrew Au, Citigroup's chief executive officer for China, said today.

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