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UBS Revises China Strategy: Halts New Fund Unit, Retains Credit Suisse Venture

UBS revamps its approach in China's booming fund market by stalling its new fund plans and keeping a Credit Suisse joint venture.

UBS building
UBS building

UBS Puts a Pin in New China Fund

UBS has reportedly suspended its previously announced plans to establish a new wholly-owned mutual fund venture in China. This halt is on the backdrop of UBS's acquisition of Credit Suisse's assets, according to individuals with inside knowledge of the situation.

Pivot in Strategy for a Growing Market

The initial plans were set up as early as 2021, as UBS sought to tap into China's thriving $3.9 trillion fund market. The decision to suspend the new venture has now left the banking giant with two significant joint ventures in China's fund market.

Regulatory Limitations Influence UBS's Move

The major reason behind UBS's change in plans is China's regulatory rule limiting a company to hold a maximum of two fund management firms. UBS already owns a significant stake in UBS SDIC Fund Management and gained a 20% share in ICBC Credit Suisse Asset Management from the recent Credit Suisse acquisition.

UBS Maintains Stake in Profitable ICBC Joint Venture

UBS has confirmed its decision to maintain its partnership with ICBC, opting to keep the stake it has in the joint venture. This decision takes into consideration the substantial income generated by the venture. ICBC Credit Suisse, based in Beijing, had assets under management totaling 1.72 trillion yuan ($238.96 billion) by the end of 2022, with a net profit nearing 2.7 billion yuan.

Uncertainty for UBS's New Fund Unit

The final decision on the fate of the new fund unit, which employs nearly 60 people, is still at least a year away. This leaves the unit's staff in a state of uncertainty as they wait for UBS to finalize its decision.

UBS's Decision Reported

This strategic move of retaining two joint ventures in China by UBS was first reported by Ignites Asia on Monday. UBS, Credit Suisse, and ICBC Credit Suisse have not yet released any official comments regarding this matter.