UBS is selling a partial stake in one of its securities joint ventures to Beijing State-owned Asset Management (BSAM), a key step for the Swiss bank as it consolidates operations in China after its merger with Credit Suisse.
Its joint venture partner Founder Securities said in a filing on Monday (Jun 24) that Founder would offload its entire holding of 49 per cent in the joint venture, at a price of 885 million yuan (S$164.9 million).
Meanwhile, UBS is selling a 36.01 per cent stake in the venture to BSAM for US$91.4 million, the Swiss bank said in a separate statement. UBS’s stake had been 51 per cent, and it is not clear whether it continues to hold the remaining shares.
The stake sale comes after UBS started looking for a buyer for the unit last year after inheriting the ownership from Credit Suisse.
UBS already has another securities joint venture in China – UBS Securities – in which it owns a 67 per cent stake, with the remaining 33 per cent held by BSAM.
China’s securities regulation prohibits any entity from having more than one majority-owned securities firm locally, which means UBS had to either sell a stake or trim its shares to minority status.
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BSAM outbid Citadel Securities, one of the largest market makers globally, to win the deal, two sources with knowledge of the matter told Reuters.
Citadel Securities still sees great growth potential in China’s economy and capital markets, and the outcome in this process doesn’t change its commitment to expanding its presence there, a source with knowledge of Citadel Securities’ thinking said.
Citadel Securities declined to comment.
One of the sources said UBS leaned towards BSAM because the Swiss bank plans to boost ownership in UBS Securities, which requires BSAM to auction off some or all of its holdings.
“We have a comprehensive onshore multi-entity set-up across the two firms (UBS and Credit Suisse) with specific regulatory requirements to comply with,” UBS CEO Sergio Ermotti said in a statement.
“So it is optimal for us to sell the 36.01 per cent stake in Credit Suisse Securities to our key long-term business partner with whom we have worked closely for almost 20 years to develop our business in China.”
UBS Securities was established in 2006 and became the first foreign majority-owned securities firm in 2018. REUTERS
