UBS Group is in talks with a Beijing-based government investment fund to exchange its stake in Credit Suisse’s onshore securities venture for complete control of its China platform.
According to Bloomberg, the Zurich-based bank intends to purchase the 33% stake maintained by Beijing State-Owned Assets Management Co. in its partnership with UBS Securities.
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In exchange, UBS will sell a portion or all of its 51% ownership in Credit Suisse Securities (China) to the Beijing government fund.
The current proposal adds a fresh element to Credit Suisse’s long negotiation process, pitting Chinese billionaire Jack Ma’s Ant Group Co. alongside Ken Griffin’s Citadel Securities.
For UBS, offering the Credit Suisse initiative to the Beijing government would deter an established global player like Citadel, which excels in market-making and execution.
Moreover, UBS sold Credit Suisse when its Swiss rival failed, violating Chinese restrictions that prohibit foreign owners from maintaining majority holdings in domestic brokerages at the same time.
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By GlobalDataDespite its prior attempts to raise its stake, the Beijing government is averse to sell UBS because of the onshore business’s development and profitability potential.
Furthermore, the UBS Group has repurchased 298,537,950 shares as part of the 2022 share buyback programme, recapturing 8.62% of the company’s current registered share capital.
The entire share buyback volume from UBS was CHF5,009,665,264 ($5,244,697,247), including CHF1,181,782,165 in 2023 prior to the announcement of Credit Suisse’s takeover.
On 12 April 2023, the Swiss Takeover Board allowed the use of up to 178,031,942 shares repurchased under the 2022 programme and intended for cancellation in the acquisition of the Credit Suisse Group.
It intends to repurchase up to $1bn of shares in 2024, beginning once the merger of UBS and Credit Suisse is completed, which is anticipated by the end of the second quarter.
