UBS Group AG To Boost Majority Stake To 51% In China JV

The Swiss bank — UBS Group AG (NYSE:UBS) — has expressed interest in increasing majority stake in its Chinese securities venture with the submission of application to China’s securities regulator — The China Securities Regulatory Commission (CSRC), Bloomberg reported. This moves follows CSRC’s lessening restrictions on foreign ownership of brokerages announced earlier this year.

Notably, indicating their readiness to allow greater access to global banks into their financial markets, the securities regulator has set the month of June as deadline for foreign companies to increase majority stake to 51% in securities JVs, up from the existing ceiling of 49%. Regarding this, the CSRC detailed the guidelines and experience mandatory for foreign shareholders, last week, along with the scale of businesses which can be recognized.

Therefore, to explore opportunities for its investment banking, wealth and asset management operations in China, this Zurich-based bank targets to raise stake to 51%, up from the existing 24.99%.

Conclusion

Global investment banks’ expansion has been limited in China for the past few years due to restrictions imposed on ownerships. Therefore, with the easing out of boundaries for global banks and the growing Chinese economy, major foreign banks will be attracted to expand here. Apart from UBS Group AG, Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) are among the major brokerages likely to acquire majority stakes in their Chinese joint ventures.

Over the last six months, shares of UBS Group AG have decreased 3.1% compared with the 1.1% decline registered by the industry.

Currently, UBS Group AG carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-performing foreign bank includes Lloyds Banking Group (LON:LLOY) PLC (NYSE:LYG) , with a Zacks Rank #1. The bank has been witnessing slight upward estimate revisions for the last 90 days.

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