UBS Group AG UBS is considering the sale of the China brokerage venture of Credit Suisse and has reached out to several financial firms for the same. The news was reported by Bloomberg that cited people familiar with the matter.
UBS has sent invitations to bid to companies, including Warburg Pincus and Citadel Securities LLC. The bids are likely to reach at least 1 billion yuan ($137 million).
The plan to divest the operation follows UBS’s buyout of Credit Suisse, resulting in pruning overlapping businesses and job cuts. Since UBS already controls a securities venture in China and cannot have two licenses in the same business, the sale is apt.
In an interview earlier this week, Sergio Ermotti, the chief executive officer of UBS, informed about considering options regarding the said Credit Suisse securities venture.
Following the China authorities opening up the financial markets, Credit Suisse gained full control of its venture in the country. It acquired its China partner Founder Securities’ 49% stake for $160 million and had been waiting for the regulatory nod to fully own the operations.
Notably, earlier this month, it has been reported that UBS Group has expected to cut around 3,000 jobs in Switzerland in the upcoming period. It had been planning on workforce reduction at Credit Suisse post its acquisition in order to save costs. During the integration of Credit Suisse, the company expects more staff to leave on their own accord.
Such job cuts are being planned by UBS as it aims to achieve gross cost reductions of more than $10 billion by the end of 2026. Of the total layoffs, 1,000 employee reductions will be initiated in the later part of 2024. In an attempt to restructure Credit Suisse, the 2,000 staff redundancies will take place.
While the acquisition of Credit Suisse has attracted its litigation portfolio,management believes that the full integration of Credit Suisse will be the most beneficial option for the company in the upcoming period.
UBS Group’s shares have gained 20.4% on NYSE over the past six months compared with the industry’s rise of 7.9%.
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UBS sports a Zacks Rank #1 (Strong Buy) at present.
With easing policies to encourage foreign firms to have full ownership of businesses, a number of companies have been expanding in China’s brokerage and asset management industries.
JPMorgan Chase & Co. JPM and Goldman Sachs Group Inc. GS were the first international banks to take full ownership of China ventures. JPM and GS took full control over respective operations in 2021.
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