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UBS Group (UBS) to Raise Stake in China Joint Venture to 67%

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UBS Group AG (UBS - Free Report) is mulling to increase its stake in the China securities joint venture (JV), as two of the bank’s partners are seeking to sell stakes. The Swiss banking giant, which became the first foreign bank in 2018 to get a nod for majority control of a JV in China, is planning to acquire another 16% of the pie, boosting its control to 67%.

UBS Group has been  conferring the purchase with Guangdong Provincial Transportation Group Co. and China Guodian Capital Holdings Ltd., who are willing to stake down 14% and 1.99% respectively, in the JV.

Opposed to its peers such as The Goldman Sachs Group (GS - Free Report) and Credit Suisse Group (CS - Free Report) , the Zurich-based bank has no objective to pursue full ownership, which was permitted by China last year for foreign banks. UBS Group opts better to keep the asset management arm of the Beijing government as a shareholder because of the valuable networks it can equip with in China.

UBS Group is in the course of shifting several managing directors from Hong Kong to mainland China to better contend for deals in the country. The greater exposure to China’s financial sector reflects better opportunities for UBS Group’s business units.

Other Global Banks on the Same Path

In addition to UBS Group, various global finance companies are seeking to expand operations in China. Many of these firms have already started taking advantage of the available options therein. These companies have enterprising plans to expand in China as the nation opens its $54-trillion financial market. By attaining control of their firms, they are more competent to set strategic directions to foster investments.

JPMorgan Chase & Co. (JPM - Free Report) raised the bank’s stake in November 2020 in its venture to 71% for about $27 million. In December 2020, Goldman snapped up 49% in its venture that it didn’t own previously.

Shares of UBS Group have gained 46.6% so far this year compared with the industry’s 10.2% growth.


The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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