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After its $3.25B acquisition of Credit Suisse last month, UBS (NYSE:UBS) has decided to suspend work on setting up a wholly owned mutual fund business in China as the recent purchase brought with it a lucrative joint venture in the same business, according to media reports.
UBS (UBS) planned as early as 2021 to set up its own mutual fund in China to tap into China’s fast-growing $3.9T fund market, Reuters said. Pausing that plan is mainly the result of a Chinese law that prohibits any company from owning more than two fund management firms in the market, two people with knowledge of the UBS plans told Reuters.
UBS (UBS) currently owns 49% of UBS SDIC Fund Management in China and a 20% stake in ICBC Credit Suisse Asset Management, a joint venture with Industrial and Commercial Bank of China (OTCPK:IDCBY) (OTCPK:IDCBF), the world’s largest bank. The Swiss bank decided to keep the CS joint venture and mantain its partnership with ICBC, according to the Reuters report.
In reaching the decision, UBS (UBS) took into account the rich profits the joint venture with ICBC generates, a third person told Reuters. ICBC Credit Suisse, with CNY 1.72T ($240B) in assets under management at the end of 2022, posted almost CNY 2.7B ($370M) in net profit last year, ICBC disclosed.
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