UBS Navigates Complex Regulatory Terrain in Bid for Full Control of China Platform (Updated)

Zinger Key Points
  • UBS is negotiating with its state-owned shareholder for share swaps and discussing selling Credit Suisse Securities to Citadel Securities.
  • UBS has been aiming to sell the entire Credit Suisse China unit for approximately 2 billion yuan.

Editor’s Note: The story has been updated to correct Citadel CEO name

UBS Group AG UBS is reportedly in discussions to attain full ownership of its China platform through a strategic swap involving its stake in Credit Suisse’s onshore securities venture

The Zurich-based lender is reportedly eyeing the 33% stake held by Beijing State-Owned Assets Management Co. in their joint venture UBS Securities Co., in exchange for selling part or all of its 51% stake in Credit Suisse Securities (China) to a Beijing government investment fund.

This development adds a new dimension to the ongoing bidding war for Credit Suisse’s investment bank in China. Notable players such as Ant Group Co., backed by Chinese billionaire Jack Ma, and Citadel Securities LLC, founded by Ken Griffin, and led by CEO Peng Chao, are actively participating

Selling the Credit Suisse venture to the Beijing government could deter formidable contenders like Citadel, renowned for its expertise in market-making and trading execution.

Chinese regulations prohibit a foreign shareholder from concurrently holding majority stakes in two domestic brokerages, the Bloomberg report added. 

UBS has been seeking to increase its ownership to 100%, but the Beijing government has hesitated, considering the onshore business’s promising growth and earnings prospects.

UBS is pursuing a dual-track process, negotiating with its state-owned shareholder for share swaps and engaging in advanced discussions to sell Credit Suisse Securities to Citadel Securities. 

However, both potential deals face regulatory challenges, primarily concerning the Chinese government’s preference regarding ownership of foreign-owned brokerages.

UBS has been aiming to sell the entire Credit Suisse China unit for approximately 2 billion yuan, which includes the stake owned by its local partner. 

Citadel Securities made a bid in late December ranging from 1.5 billion yuan to 2 billion yuan, lower than a competing offer from Ant Group. 

Credit Suisse previously agreed to purchase the remaining 49% stake from its Chinese partner for 1.14 billion yuan, valuing the firm at around 2.3 billion yuan, but this deal fell through after UBS took over.

Price Action: UBS shares are down 1.27% at $30.76 on the last check Tuesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo via Shutterstock

Market News and Data brought to you by Benzinga APIs
Posted In: M&ANewsTop StoriesMarketsGeneralAI GeneratedBriefsStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!