In the recent round of investments in China’s largest banks, UBS’s $500 million punt on Bank of China amounted to little more than a deposit against future investment banking fees. Its investment in Beijing Securities is a different matter: equities is a business that UBS really understands and nowhere more so than in Asia, where it has one of the region’s strongest franchises.
This perhaps explains why the Swiss bank has secured the first Sino-foreign joint venture to win unfettered access to China’s domestic securities markets.
The deal, announced in September, entails a capital injection by UBS of $210 million into a new joint venture in which it will take a 20% stake, with the rest of the equity split between Beijing state-owned Assets Supervision and Administration Commission, part of the Beijing city government; three unnamed state-owned enterprises; and a small stake to be held by the World Bank.
UBS’s money will be...
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