Back to top

Image: Shutterstock

UBS Group (UBS) Plans to Divest Credit Suisse's China Unit

Read MoreHide Full Article

UBS Group AG (UBS - Free Report) has started final negotiations with a Beijing-backed fund to divest its China brokerage venture of Credit Suisse as talks with Citadel Securities LLC stalled. This news was reported by Bloomberg, citing people familiar with the matter.

Beijing State-Owned Assets Management Co. (“BSAM”), Credit Suisse's Chinese partner - Founder Securities, and UBS Group are now having exclusive talks over the acquisition. By the end of this month, a decision and agreement with the buyer might be achieved.

As part of the proposed two-step transaction, the Zurich-based lender intends to sell the majority of its interest in Credit Suisse Securities (China) Ltd. to the Beijing city government, which will eventually own 85% of the company.

The second part of the transaction would include UBS Group acquiring BSAM’s 33% stake in UBS Securities Co. to achieve complete ownership.

Credit Suisse venture was up for sale by UBS as the company took control of its smaller Swiss rival. However, a foreign shareholder is prohibited by Chinese regulations from simultaneously owning the majority of shares in two domestic brokerages.

Apart from Citadel Securities, other big players, such as Chinese billionaire Jack Ma-backed Ant Group Co., showed interest in the deal by placing a higher bid. UBS pursued approximately 2 billion yuan ($276 million) for the entire China unit, including the stake held by Founder Securities. Per the people familiar with the matter, BSAM’s offer is slightly below the asking price.

In the middle of a slowdown in dealmaking, the latest move ends the months-long struggle for Credit Suisse's investment bank in the second-largest economy in the world.

Shares of UBS have jumped 49% on NYSE over the past year compared with the industry’s growth of 16%.

 Zacks Investment Research
Image Source: Zacks Investment Research

Currently, UBS Group sports a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Banks Taking Similar Steps

Citigroup Inc. (C - Free Report) completed the sale and migration of its onshore China-based consumer wealth portfolio to HSBC Holdings plc (HSBC - Free Report) . As a result of the sale, C will transfer assets under management and deposits worth approximately $3.6 billion to HSBC Bank China. More than 300 employees of Citigroup were transferred to HSBC as part of the deal.

More than 300 employees of Citigroup were transferred to HSBC as part of the deal. Per the previously signed agreement, C will transfer its remaining credit card portfolio in China to Fubon Bank in 2024.

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Citigroup Inc. (C) - free report >>

UBS Group AG (UBS) - free report >>

HSBC Holdings plc (HSBC) - free report >>

Published in