Credit Suisse puts up China brokerage venture for sale -sources

Credit Suisse AG

09/06/2023 05:42

(Adds details on Credit Suisse China and UBS China venture in
paragraphs 4, 9-13)
    By Selena  Li and Engen Tham
       HONG KONG/SHANGHAI, June 9 (Reuters) - Credit Suisse
 CSGN.S  and a joint venture partner are seeking buyers for
their China securities brokerage business due to the Swiss
bank's takeover by rival UBS  UBSG.S , said two people with
direct knowledge of the matter.     
    Citigroup  C.N  had at one point shown interest in acquiring
Credit Suisse Securities China (CSS), they added.
    Citi, whose CEO Jane Fraser was in China this week, is
setting up a securities brokerage in China. It had hoped to
fast-track development via an acquisition but decided to stick
to its original plan to grow the business organically, said one
of the people.
    According to Chinese securities regulations, one entity
cannot hold two licenses for majority-owned brokerages. UBS has
a 67% stake in a profitable securities venture with Beijing
State-owned Asset Management.
    Credit Suisse owns 51% of loss-making CSS and struck a deal
to buy out its partner Founder Securities  601901.SS  last year.
That transaction has yet to receive Chinese regulatory approval.
        The sources asked not to be identified due to the
sensitivity of the matter.
    UBS and a spokesperson representing both Credit Suisse and
CSS declined to comment. Citi declined to comment.
    Founder Securities and the China Securities Regulatory
Commission did not immediately respond to Reuters requests for
comment.
    CSS was established in 2008 in Beijing with Credit Suisse
initially owning 33.3% before raising its stake to 51% in 2020.
In addition to brokering, it is licenced to conduct
underwriting, sponsoring, proprietary trading and to act as an
investment consultancy.
   It booked a net loss of 254 million yuan ($36 million) in
2022 and had headcount of 234 at the end of last year, according
to its annual report. The potential deal value for the business
could not be immediately learned.
    UBS plans to announce the finalising of its tie-up with
Credit Suisse as soon as next Monday.
    The new group will have much work to do to consolidate the
banks' operations in China where both have investment banking,
wealth, and fund management businesses. 
        Sources have also said that Credit Suisse has scrapped
plans to set up a locally incorporated bank in China due to a
potential regulatory conflict arising from the acquisition by
UBS.

 (Reporting by Selena  Li in Hong Kong and Engen Tham in
Shanghai; Editing by Sumeet Chatterjee and Edwina Gibbs)
 ((Selena.Li@thomsonreuters.com; +852 39525868;))