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UBS will take a $500-million stake in state-backed Bank of China, the Swiss bank said on Tuesday, in a deal which it hopes will give it access to the Asian wealth boom and a steady flow of investment banking deals.
But the accord comes just as arch rival Credit Suisse Group appeared to suffer a setback in its own plans for China.
Sources familiar with the situation said CS’s expected investment of $500 million in China Construction Bank has been scrapped to prevent a delay in the Beijing-run lender’s $7.7 billion initial public share offer.
Western banks have been scrambling to enter China as Beijing gradually opens to foreigners and cleans up its troubled banking sector.
Last week France’s BNP Paribas said it was in talks with Nanjing City Commercial Bank. A source close to the matter said it could buy a 18.5 per cent stake for around $100 million.
The UBS deal with China’s second-biggest bank, which covers investment banking and securities operations, comes after Bank of China appointed UBS and Goldman Sachs to underwrite its public share offering scheduled for the first half of next year. The $4-billion stock listing will generate $120 million or more in underwriting fees and Bank of China’s investment banking arm will also be a lead underwriter.
UBS — the world’s sixth-largest bank by market value — said under its deal with BOC the two banks will be preferred partners, allowing UBS to combine products and know-how with BOC’s brand name and huge customer base in China. — Reuters
