China will allow UBS to control local securities business

China will allow UBS to control local securities business

After the acquisition, UBS AG's shareholder ratio in UBS Securities will increase from 24.99% to 51%.

UBS is acquiring from China Guodian Capital Holdings and from state agricultural conglomerate Cofco their 12.01 percent and 14 percent stakes in UBS Securities respectively.

UBS has been authorised 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. Ltd. will own 14.01 percent, and finally, China Guodian Capital Holdings will own 1.99 percent.

UBS was the first foreign bank to apply to raise its shareholding in a China venture after CSRC's policy issued in April 2018, allowing foreign companies to take up to 51 percent stakes in securities firms in China. The government has also planned to eventually allow them to gain full control in the coming years.

"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. Lack of control over joint venture operations in China's potentially lucrative securities market resulted in difficulties in integrating mainland ventures with global operations.

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Other financial firms like Wall Street titan JPMorgan Chase & Co and Japan's Nomura Holdings Ltd are still awaiting approval.

Earlier this week, two European insurance giants, Allianz SE and Axa SA, received approval to expand their footprint in China.

A greater stake in UBS Securities Co.

UBS Chief Executive Sergio Ermotti said in a statementexternal link: "Growing our China business is key element of our strategy. This step underlines our long-term commitment to this market and we will continue to pursue opportunities".

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

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