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China economy

China allows UBS to take controlling stake in local securities firm

  • Swiss giant is first foreign bank approved to do so since Beijing relaxed rules on financial industry in move to open up economy
PUBLISHED : Saturday, 01 December, 2018, 4:34pm
UPDATED : Saturday, 01 December, 2018, 10:03pm
Global banks like UBS have long been prevented from independently operating in China by laws limiting foreign ownership of local financial firms. Photo: AFP FILE PHOTO: An advertising board (L) showing a Chinese stone lion is pictured near an entrance to the headquarters (R) of China Securities Regulatory Commission (CSRC), in Beijing, China, September 7, 2015. REUTERS/Jason Lee/File Photo FILE PHOTO: The logo of insurer Allianz SE is seen on the company building in Puteaux at the financial and business district of La Defense near Paris, outside Paris, France, May 14, 2018. REUTERS/Charles Platiau/File Photo GLOBAL BUSINESS WEEK AHEAD Global banks like UBS have long been prevented from independently operating in China by laws limiting foreign ownership of local financial firms. Photo: AFP

UBS has been authorised by China’s securities regulator to take a controlling stake in a local business, making the Swiss giant the first foreign bank allowed to do so under new rules.

Beijing in April relaxed the rules in the financial industry in a move to open up the economy.

“The China Securities Regulatory Commission (CSRC) recently approved UBS AG to increase the shareholding ratio of UBS Securities Co Ltd to 51 per cent,” the regulator said in a statement late on Friday.

“This is the first foreign-controlled securities company approved by the China Securities Regulatory Commission after the implementation of the Measures for the Administration of Foreign-invested Securities Companies.”

Wall Street’s dream of prying open China’s US$45 trillion market is inching toward reality

USB AG, which currently owns about 25 per cent of shares in the USB Securities Co joint venture, said in a statement that it would acquire stakes from China Guodian Capital Holdings and COFCO.

Other financial firms like Wall Street titan JPMorgan Chase and Japan’s Nomura Holdings are still awaiting approval.

Laws limiting foreign ownership of local financial firms have long stopped global banks from independently operating in China and limited their growth.

But Beijing said it would liberalise shareholding limits in the financial services industry last year, soon after US President Donald Trump visited.

Officials moved to make good on the pledge in April, immediately allowing foreign investors to take 51 per cent stakes in securities firms and fund managers, with pledges set out to eventually allow full control.

Earlier this week, two European insurance giants Allianz and Axa received approval to expand their footprint in China – Allianz has been allowed to start a company fully funded by foreign capital while Axa would take full control of a joint venture.

Beijing has pledged to open up its economy as it looks to head off escalating trade tensions with the United States, which accuses it of using unfair practices to get an advantage for its own firms and destroying American jobs.

Trump has slapped punishing tariffs on more than US$250 billion in Chinese imports so far this year and China responded with its own tariffs on US$110 billion in US goods.

But the US president has threatened to target the remaining US$267 billion worth of Chinese imports as well, hitting Apple iPhones and laptops produced in China.

Trump is set to meet Chinese leader Xi Jinping in Argentina on Saturday where they are attending the G20 summit.