Swiss-based financial group UBS AG unveiled plans to take control of
Beijing Securities on Wednesday in a move that would make it the first foreign institution to buy into a Chinese brokerage.
UBS, the world's sixth-largest bank by market value, said it was finalizing talks with government authorities over plans to invest 1.7 billion yuan (US$210 million), in restructuring efforts at the brokerage in return for an equity stake.
The new company would provide domestic debt and equity underwriting and other services and carry licenses allowing it to "operate across a breadth of areas unparalleled in other Sino-foreign joint ventures," UBS said in a statement.
The announcement comes a day after UBS unveiled plans to take a US$500-million stake in Bank of China in a deal it hopes will give it access to the Asian wealth boom and a steady flow of investment banking deals.
The brokerage could serve as a base for UBS, the world's largest wealth manager, to start an investment banking business to rival major players such as Goldman Sachs and Morgan Stanley, which are working on their own domestic firms.
Beijing Securities, a mid-sized brokerage by Chinese standards, has 27 stock trading offices around China. It is controlled by the
Beijing city government, whose 34 percent stake makes it the largest single shareholder.
"It's a very positive move," said analyst Kinner Lakhani at ABN AMRO in London.
He said UBS had set itself apart from other Western investors by avoiding spending heavily on "anchor" stakes in Chinese banks, choosing instead to pinpoint investments in specific areas and then pursue them with joint ventures.
"What we like about it is that they are investing in a new vehicle. It could have brought in a lot of baggage, liabilities, etcetera. But as UBS clearly states, this structure shields them from any liabilities from the past," Lakhani said. "It's starting with a clean sheet of paper."
Analyst Christoph Ritschard at regional bank ZKB said the
Beijing deal, coupled with the Bank of China project, would allow UBS to tap China's growth potential.
"This broad pallette of activities is new model for cooperation between China and foreigners and could set a precedent for further restructurings," he said.
