We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UBS Group (UBS) to Swap Stake in CS Securities in China
Read MoreHide Full Article
UBS Group AG (UBS - Free Report) is considering attaining the complete ownership of its operations in China. In order to do so, UBS will swap its holding in Credit Suisse’s (“CS”) onshore securities business with a Beijing government investment fund. This news was reported by Bloomberg, citing people familiar with the matter.
Particularly, UBS Group will acquire 33% stake held in its joint venture with Beijing State-Owned Assets Management Co., UBS Securities Co. In return, UBS is willing to sell part of or its entire 51% stake in CS Securities to the Beijing government investment fund.
The deal was proposed by UBS Group as Chinese regulations do not allow any foreign shareholder to hold majority stakes in two domestic brokerages simultaneously. UBS already owns 67% stake in its own UBS securities since 2022.
Besides that, the company’s proposal serves several other purposes. Firstly, UBS could potentially reduce competition with its strongest competitor, Citadel Securities. Secondly, this proposal aligns with UBS Group's strategic goal of consolidating its ownership of its China platform, which will allow the bank to strengthen its position further in the Chinese market.
Currently, UBS is following parallel approaches to address its ownership structures. Firstly, it is in discussions with its state-owned shareholder to potentially swap shares. Alongside, the bank is also engaged in advanced discussions to sell CS Securities to Citadel Securities.
UBS Group’s asking price for the entire CS’ China unit, including the stake held by its local partner, is approximately 2 billion yuan. The process for bidding of CS’ investment bank in China has been continuing for several months, with several strong competitors, including Ant Group and Citadel Securities.
In the past, UBS has made efforts to increase its ownership to 100% in China. However, the Beijing government is reluctant to divest its stake, as the Chinese government foresees business growth and earnings potential in the company’s operations.
UBS shares have gained 26.1% on NYSE over the past six months compared with the industry’s growth of 15%.
In order to expand its footprint in the Asia market, HSBC Holdings plc (HSBC - Free Report) has been exiting from several markets.
HSBC plans to sell its various business units in Germany. The units in consideration for sale are its German wealth-management, custody and fund administration units. However, the bank’s corporate banking and trading activities in the country will not be affected by the review.
HSBC completed the divestiture of its Canada unit to Royal Bank ofCanada (RY - Free Report) for C$13.5 billion. The deal, announced in November 2022, will lead to an estimated gain on sale of $4.9 billion in the first quarter of 2024. The acquisition is expected to bolster RY's position in a market where the top six banks control around 80% of banking assets.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
UBS Group (UBS) to Swap Stake in CS Securities in China
UBS Group AG (UBS - Free Report) is considering attaining the complete ownership of its operations in China. In order to do so, UBS will swap its holding in Credit Suisse’s (“CS”) onshore securities business with a Beijing government investment fund. This news was reported by Bloomberg, citing people familiar with the matter.
Particularly, UBS Group will acquire 33% stake held in its joint venture with Beijing State-Owned Assets Management Co., UBS Securities Co. In return, UBS is willing to sell part of or its entire 51% stake in CS Securities to the Beijing government investment fund.
The deal was proposed by UBS Group as Chinese regulations do not allow any foreign shareholder to hold majority stakes in two domestic brokerages simultaneously. UBS already owns 67% stake in its own UBS securities since 2022.
Besides that, the company’s proposal serves several other purposes. Firstly, UBS could potentially reduce competition with its strongest competitor, Citadel Securities. Secondly, this proposal aligns with UBS Group's strategic goal of consolidating its ownership of its China platform, which will allow the bank to strengthen its position further in the Chinese market.
Currently, UBS is following parallel approaches to address its ownership structures. Firstly, it is in discussions with its state-owned shareholder to potentially swap shares. Alongside, the bank is also engaged in advanced discussions to sell CS Securities to Citadel Securities.
UBS Group’s asking price for the entire CS’ China unit, including the stake held by its local partner, is approximately 2 billion yuan. The process for bidding of CS’ investment bank in China has been continuing for several months, with several strong competitors, including Ant Group and Citadel Securities.
In the past, UBS has made efforts to increase its ownership to 100% in China. However, the Beijing government is reluctant to divest its stake, as the Chinese government foresees business growth and earnings potential in the company’s operations.
UBS shares have gained 26.1% on NYSE over the past six months compared with the industry’s growth of 15%.
Image Source: Zacks Investment Research
Currently, UBS Group sports a Zacks Rank #1 (Strong Buy). You can see see the complete list of today’s Zacks #1 Rank stocks here.
Other Banks Taking Similar Steps
In order to expand its footprint in the Asia market, HSBC Holdings plc (HSBC - Free Report) has been exiting from several markets.
HSBC plans to sell its various business units in Germany. The units in consideration for sale are its German wealth-management, custody and fund administration units. However, the bank’s corporate banking and trading activities in the country will not be affected by the review.
HSBC completed the divestiture of its Canada unit to Royal Bank of Canada (RY - Free Report) for C$13.5 billion. The deal, announced in November 2022, will lead to an estimated gain on sale of $4.9 billion in the first quarter of 2024. The acquisition is expected to bolster RY's position in a market where the top six banks control around 80% of banking assets.