2023-07-11 08:22:14 ET
After its $3.25B acquisition of Credit Suisse last month, UBS ( NYSE: UBS ) has decided to suspend work on setting up a wholly owned mutual fund business in China as the recent purchase brought with it a lucrative joint venture in the same business, according to media reports.
UBS ( UBS ) planned as early as 2021 to set up its own mutual fund in China to tap into China's fast-growing $3.9T fund market, Reuters said. Pausing that plan is mainly the result of a Chinese law that prohibits any company from owning more than two fund management firms in the market, two people with knowledge of the UBS plans told Reuters.
UBS ( UBS ) currently owns 49% of UBS SDIC Fund Management in China and a 20% stake in ICBC Credit Suisse Asset Management, a joint venture with Industrial and Commercial Bank of China ( OTCPK:IDCBY ) ( OTCPK:IDCBF ), the world's largest bank. The Swiss bank decided to keep the CS joint venture and mantain its partnership with ICBC, according to the Reuters report .
In reaching the decision, UBS ( UBS ) took into account the rich profits the joint venture with ICBC generates, a third person told Reuters. ICBC Credit Suisse, with CNY 1.72T ($240B) in assets under management at the end of 2022, posted almost CNY 2.7B ($370M) in net profit last year, ICBC disclosed.
More on UBS and China:
- UBS plans to apply for mutual fund license in China (Feb. 23)
- JPMorgan, UBS, others compete for share in China's private pension market (November 2022)
- UBS looks to launch asset management joint venture with China Life (December 2021)
- UBS snags mainland China fund license (July 2017)
For further details see:
UBS pauses plan for wholly owned mutual fund business in China - report