UBS Sells Stake In China Joint Venture To Comply with Local Regulations: Report

UBS Group AG UBS shares are trading lower today. The bank is reportedly selling a partial stake in one of its securities joint ventures to Beijing State-owned Asset Management (BSAM).

The Swiss bank’s joint venture partner, Founder Securities, said on Monday that it would sell its entire 49% stake in the joint venture for 885 million yuan ($122 million), reported Reuters.

This move is a significant step for UBS as it consolidates its operations in China following its merger with Credit Suisse.

Meanwhile, in a separate statement, UBS announced that it is selling a 36.01% stake in the venture to BSAM for $91.4 million.

UBS had previously held a 51% stake, but it is unclear whether it will retain the remaining shares.

UBS also has another securities joint venture in China, UBS Securities, where it owns a 67% stake, and BSAM holds the remaining 33% of UBS Securities.

The report cited UBS CEO Sergio Ermotti’s statement, “We have a comprehensive onshore multi-entity set-up across the two firms (UBS and Credit Suisse) with specific regulatory requirements to comply with.” 

Related: UBS And Credit Suisse Swiss Unit Merger Set For July 1, Says Senior UBS Executive

“So it is optimal for us to sell the 36.01% 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.”

As per the report, China’s securities regulations prohibit any entity from owning more than one majority-owned securities firm locally, which requires UBS to either sell a stake or reduce its shares to a minority position.

According to Benzinga Pro, UBS has gained over 56% in the past year.  Investors can gain exposure to the stock via Avantis International Equity ETF AVDE and American Century ETF Trust Avantis Responsible International Equity ETF AVSD.

Also Read: UBS Wealth Management Role Split In Executive Board Reshuffle

Price Action: UBS shares are down 1.99% at $29.99 premarket at the last check Tuesday.

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

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