HONG KONG – UBS has decided to suspend its plans to establish a new fund unit in China and instead maintain ownership in a mega fund joint venture resulting from its takeover of Credit Suisse, according to two sources familiar with the matter.
The decision to indefinitely suspend the establishment of a wholly-owned mutual fund business in China was primarily driven by regulatory concerns. China’s regulations state that a company can only own a maximum of two fund management firms in the market.
Currently, UBS owns 49% of fund firm UBS SDIC Fund Management in China and has a 20% stake in ICBC Credit Suisse Asset Management, a joint venture with Industrial and Commercial Bank of China (ICBC) resulting from the Credit Suisse takeover. UBS has chosen to maintain ownership and continue its partnership with ICBC.
Credit Suisse, UBS, and ICBC Credit Suisse declined to comment on the matter.
UBS took into consideration the significant income generated by the joint venture with ICBC, according to one source and a third source familiar with the matter.
It may take more than a year for UBS to make a final decision on the fate of the newly planned fund unit, leaving approximately 60 staff members in a state of uncertainty, one of the sources added.
The news of UBS’s decision to keep two joint ventures in China was first reported by Ignites Asia.
($1 = 7.1979 Chinese yuan)