UBS allowed to control local securities business

UBS has been authorised by the mainland’s securities regulator to take a controlling stake in a local business, making the Swiss giant the first foreign bank allowed to do so under new rules.

Beijing relaxed the financial industry rules in April, in a move to open up the economy.

“The China Securities Regulatory Commission recently approved UBS AG to increase the shareholding ratio of UBS Securities Co Ltd to 51 per cent,” the regulator said in a statement late on Friday.

“This is the first foreign-controlled securities company approved by the China Securities Regulatory Commission after the implementation of the Measures for the Administration of Foreigninvested Securities Companies.”

USB AG, which currently owns about 25 per cent of shares in the USB Securities Co joint venture, said in a statement it would acquire stakes from China Guodian Capital Holdings and COFCO.

Other financial firms like Wall Street titan JPMorgan Chase and Japan’s Nomura Holdings are still awaiting approval.

Laws limiting foreign ownership have long stopped global banks from independently operating on the mainland and limited their growth.

Beijing said it would liberalise shareholding limits in the financial services industry last year, soon after US President Donald Trump visited.

Officials moved to make good on the pledge in April, immediately allowing foreign investors to take 51 per cent stakes in securities firms and fund managers, with pledges set out to eventually allow full control.

Earlier this week, European insurance giants Allianz and Axa received approval to expand their footprint on the mainland – Allianz has been allowed to start a company fully funded by foreign capital, while Axa would take full control of a joint venture.

Beijing has pledged to open up its economy as it looks to head off escalating trade tensions with the United States, which accuses it of using unfair practices to get an advantage for its own firms and destroying American jobs.

Trump has put tariffs on more than US$250 billion in Chinese imports so far this year. China responded with its own tariffs on US$110 billion in US goods.

Trump has threatened to target the remaining US$267 billion of Chinese imports as well.