Potential rifts are already beginning to show in a landmark strategic alliance between China’s biggest brokerage, by market cap, and the largest retail bank in France — even before both parties have officially signed off on the joint venture.

While executives at Citic Securities Co. are eager to form a joint venture that gives them access to new markets outside China, Crédit Agricole’s Asian subsidiary, CLSA Asia-­Pacific Markets, wants a marriage that grants it passage into China’s lucrative brokerage market, where foreign players have been hamstrung by regulatory restrictions.

The two firms signed a memorandum of understanding last month to form a landmark global strategic alliance, with an eye to combining portions of their global trading platforms. A firm agreement might not be reached until 2011, but if successful this deal would mark the first time a Chinese brokerage formed a global alliance with a foreign partner.

However, the courtship hasn’t been smooth. Citic wants to first establish the joint venture’s operations outside China, where it’s eager to tap market share. Meanwhile, CLSA wants to concentrate on business inside China’s borders first.

“They want us to hand over the best of our China businesses, and I can tell you many senior executives here will not just hand over our crown jewels unconditionally,” says one Citic Securities executive who asked not to be identified.

Citic is eager to work with Crédit Agricole’s investment banking operations in the U.S. and Europe, to expand into those markets. “The formation of the strategic partnership with Crédit Agricole’s corporate investment bank marks another significant step of Citic Securities toward internationalization,” the firm’s chairman, Wang Dongming, says in an e-mail. (Wang is among the top-­ranked executives in II’s new Captains of Asian Finance ranking; see story, page 72.)

This is Citic’s second kick at finding a foreign match. It attempted a similar joint venture with Bear Stearns Cos. in 2007, but the New York–based investment bank collapsed under the weight of toxic assets in 2008 and was sold to ­JPMorgan Chase & Co. in a fire sale.

The Hong Kong–based CLSA, formerly Credit Lyonnais Securities Asia, is pushing the tie-up with Citic to expand its reach into China.

“Any business they bring to the joint venture will be transformational for us,” says another CLSA executive, who also asked to remain anonymous as negotiations are taking place in private. “In one fell swoop — a strategic alliance with Citic Securities — CLSA catapults itself to the top of the tree in terms of foreign joint ventures.”

Since China’s regulators restrict foreign companies to just one joint venture, CLSA will have to bump its current partner to make way for the new relationship. It has had a JV in Shanghai with Hunan-­based Fortune Securities Co., a small, local brokerage firm, since 2002. Financial regulators have always looked upon foreign brokerages or their joint ventures with a suspicious eye and did not give Fortune CLSA Securities a license to trade A shares until 2008, so volumes traded have remained relatively small.