BEIJING/HONG KONG, (Reuters) – UBS has sold a part of one of its joint ventures in securities to Beijing State Owned Asset Management (BSAM), a major step in consolidating its operations in China following its merger with Credit Suisse.
In a filing made on Monday, its joint venture partner Founder Securities announced that it would sell off its entire 49% stake in the joint enterprise for 885 million yuan (122 million dollars).
UBS has sold a 36.1% stake to BSAM in the venture for $91.4 million. The Swiss bank announced this in a separate press release. UBS had a 51% stake, but it is unclear if it still holds the remaining shares.
The stake sale comes after UBS began looking for a buyer last year, after inheriting ownership of the unit from Credit Suisse.
UBS already owns a 67% stake in UBS Securities, while the remaining 33% is held by BSAM.
China’s securities regulations prohibit any entity from owning more than one local securities firm. This meant that UBS would have to sell a stake, or reduce its shares to a minority status.
Reuters reported that two sources familiar with the matter said that BSAM won the deal by outbidding Citadel Securities, a global market maker.
Citadel Securities continues to see great growth potential for China’s economy, capital markets and financial sector, according to a source familiar with Citadel Securities’ thinking.
Citadel Securities declined comment.
One source said UBS was leaning toward BSAM, because the Swiss bank intends to increase ownership in UBS Securities and BSAM must auction off some or all its holdings.
In a statement, UBS CEO Sergio Ermotti stated that the two firms have a multi-entity onshore setup with specific regulatory requirements. “It is therefore best for us to sell our 36.01% stake in Credit Suisse Securities, to our long-term partner with whom we’ve worked closely for nearly 20 years to grow our business in China.”
UBS Securities was founded in 2006 and became the world’s first foreign-owned securities firm in 2018