UBS secures majority stake in a China securities joint venture

Irving Hamilton
December 4, 2018

UBS AG has been authorized by China's securities regulator to take a controlling stake in a local business, making the Swiss giant the first foreign bank allowed to do so under new rules.

UBS has received the approval from the China Securities Regulatory Commission (CSRC) to increase its shareholding in its securities joint venture in China, UBS Securities from 24.99 percent to 51 percent, according to a media release sent on Friday.

The group now owns 24.99% of the UBS Securities Co. Ltd will own 33 percent, Guangdong Provincial Communication Group Co. JV will increase its stake in the joint venture to 51%.

"This will be the first foreign-controlled brokerage approved by the CSRC since the rules on foreign investment in brokerages were implemented", the commission said.

Other financial firms like Wall Street titan JPMorgan Chase & Co and Japan's Nomura Holdings Ltd are still awaiting approval. Allianz was given the green light to start its fully funded company while Axa was allowed full control of a joint venture, AFP stated in its report.

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Laws limiting foreign ownership of local financial firms have long stopped global banks from independently operating in China and limited their growth.

A greater stake in UBS Securities Co. "The further opening of China's financial market is a major opportunity for UBS's business in China, including its wealth management, investment banking and asset management", said Sergio Ermotti, CEO of UBS AG.

"Since establishing our onshore presence in 1989, we have been at the forefront of foreign investment in China".

Kathy Shih, president of UBS Asia Pacific, described the development as a "key milestone" in the Swiss bank's history.

Eugene Qian, president of UBS Securities, said with majority control, UBS can better realize the opportunities in China's capital markets and make a greater contribution to the UBS Group.

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