UBS Group AG is in discussions to acquire a majority stake in its Chinese securities joint venture, as global banks rush to take advantage of Beijing’s pledge to further open its financial markets, chief executive officer Sergio Ermotti said.
UBS has started talks with its local partners on taking a 51 percent stake in the venture, Ermotti said in an interview with Bloomberg Television in Shanghai yesterday.
UBS is ahead of its plan to double headcount in China over five years, Ermotti said, adding that the Zurich-based bank could have 1,200 staff in China by the end of this year.
“So we are in line with our plans to grow our business, regardless of the stake,” Ermotti said. “But of course if we can have a more rounded financial participation in our business here, we do welcome that.”
He said the discussions on a 51 percent stake could be concluded in “a matter of months.”
Other global securities giants such as Morgan Stanley and Goldman Sachs Group Inc have already signaled a desire to take majority stakes in their Chinese ventures, following the Chinese government’s announcement in November last year that it would relax foreign ownership restrictions.
China said it plans initially to allow 51 percent stakes before abolishing the cap completely after another three years.
The Swiss bank in early 2016 announced that it planned to add about 600 employees in China across wealth management, investment banking, equities, fixed income and asset management businesses over a period of five years.
It is the first time UBS has confirmed talks on taking a majority stake in its China venture. Before the government announcement, UBS had been working on a plan to boost its stake in its local venture to 49 percent, up from 25 percent at present.
The four Chinese companies in the venture are Beijing Guoxiang Asset Management Co (北京國翔資產管理有限公司), China Guodian Capital (中國國電集團公司), COFCO Group (中糧國際) and a Guangdong transport company.
Goldman Sachs has quietly been laying the groundwork for taking control of its onshore securities business in China, holding discussions with its local partner Fang Fenglei (方風雷), people familiar with the matter said in November last year.
Morgan Stanley has already raised its stake in its local securities joint venture to 49 percent from one-third, and aims to hold a majority once China gives details on how the rule change is to be implemented.
However, Ermotti said a majority stake for UBS would be less significant because the company already has management control over the venture.
“Honestly, strategically speaking it doesn’t really change at lot because we have been in full control from the managerial standpoint” in China, Ermotti said.
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