China Approves UBS to Control Its Securities Joint Venture

The China Banking and Insurance Regulatory Commission today approved plans by UBS Group AG to acquire a majority stake in its mainland securities venture, becoming the first global bank to take advantage of Beijing’s latest commitment to ease foreign-ownership restrictions.

“This will be the first foreign-controlled brokerage approved by the securities regulator since the rules on foreign investment in brokerages were implemented,” China’s securities regulator said in a statement on Friday.

Earlier this year, UBS applied to raise the stake in its China venture, called UBS Securities, to 51 percent, up from the current 25 percent.

Door opens for $50 billion cake

China has repeatedly pledged to open its financial markets, including allowing foreign firms to own as much as 51 percent of their securities ventures, up from the current 49 percent ceiling.

The approval offers a great opportunity for the Zurich-based lender’s investment banking, wealth and asset management operations in China, the Swiss bank said in its statement.

Other global investment banks, including Morgan Stanley and Goldman Sachs, also seek a controlling stake in its Chinese business under new rules. Having spent years operating with limitations, where they were not authorized to surpass a 49 percent limit, both banks also signaled a desire to take majority stakes in their Chinese ventures in order to expand their mainland’s business.

Securities firms in China, which are mostly dominated by state-owned banks, generated more than $50 billion in revenue in 2017, official data show.

Chinese President Xi Jinping said in June that the nation would accelerate the opening up of its financial sector, including measures to facilitate foreign access to the Chinese insurance industry and easing restrictions for entry and expansion of foreign financial institutions.