Switzerland’s largest bank, UBS, has become the first foreign bank to hold a majority stake in a China securities joint venture, after gaining approval from country’s securities regulator.
On Friday, the China Securities Regulatory Commission gave approval for UBS AG to hold the majority stake in its securities joint venture. The Swiss bank, which currently owns 24.99% of the UBS Securities Co joint venture, had applied in May this year to the China Securities Regulatory Commission (CSRC) to raise its stake to 51%. UBS is acquiring from China Guodian Capital Holdings and COFCO their 12.01% and 14% stakes in UBS Securities, respectively.
This makes it the first foreign bank to secure such control under new rules announced by Beijing last year.
UBS Chief Executive Sergio Ermotti said in a statementexternal link: “Growing our China business is key element of our strategy. The further opening up of China's financial sector represents great opportunities for our wealth management, investment bank and asset management businesses.”
“Since establishing our onshore presence in 1989, we have been at the forefront of foreign investment in China. This step underlines our long-term commitment to this market and we will continue to pursue opportunities.”
This move should allow UBS to expand its business in the world’s second-largest economy. The venture’s existing operations include debt and equity underwriting and financial advisory.
This move is significant as China is traditionally restrictive on foreign firms owning its companies. The biggest global investment banks, which have struggled to build their China businesses under rules that previously limited them to 49% ownership, have long sought the lifting of such limits on joint ventures. Lack of control over joint venture operations in China’s potentially lucrative securities market resulted in difficulties in integrating mainland ventures with global operations.