By December, UBS will be the first foreign lender that will take a majority stake in its securities joint venture as China eases on rules on foreign ownership of financial companies a year earlier than planned.
The Office of Financial Stability and Development Committee and the State Administration of Foreign Exchange announced in July that China would undertake measures to open up its financial sector which include removing shareholder limits on foreign ownership of not only securities but also insurance and fund management.
Though the exact date of effectivity "remains to be clarified," this removal of cap ownership means UBS can increase its stake in UBS Securities China from the current 51 percent to 100 percent by 2020.
Though its third-quarter portfolio showed a 16 percent drop to 1.05 billion Swiss francs compared from the year earlier, UBS said it expects to take full control of its business in the mainland after receiving approval in November for UBS Securities China.
Even if the Swiss bank reported a 59 percent drop in pre-tax profit in its investment bank, this had been offset by gains in its global wealth management and personal and corporate banking businesses.
UBS' private bank brought in $10.9 billion in Asia, increasing the total invested assets in the region to $420 billion.
UBS Group also said it pulled in $15.7 billion to its wealth management unit, an area where UBS is uniquely strong.
UBS is one of several foreign banks and financial companies expected to take advantage of the elimination of ownership restrictions in the mainland.
HSBC was the first foreign bank to receive approval to form a majority-controlled securities joint venture, HSBC Qianhai Securities, in 2017.
JPMorgan and Nomura received approval from Chinese authorities to open majority-owned securities broker joint ventures in China just this March.
Credit Suisse, in April, said it would take a 51 percent controlling stake in its securities joint venture, putting in 628.7 million yuan into the company.
In August, Goldman Sachs requested approval to take majority control of its securities joint venture from its current 33 percent in Goldman Sachs Gao Hua Securities and made it clear that it plans to take full control of the joint venture as soon as it is allowed.
Morgan Stanley also requested approval to take a majority stake in its Chinese securities joint venture.
With foreign banks totally owning their securities operations on the mainland, they can put as many resources they want into them, make more returns from them and steer the bank towards the markets and transactions they want to chase.
From then on, integrating mainland operations into their global operations will be seamless.
