Credit Suisse drops China bank plan to avoid UBS regulatory conflict
Credit Suisse has abandoned its plans to establish a locally incorporated bank in China due to the potential for regulatory conflicts that could arise from its upcoming merger with UBS, according to sources with direct knowledge of the matter. For several years, Credit Suisse had been planning to set up a wholly owned local bank in China, which would have enabled it to expand its onshore wealth management business by setting up a branch network to draw deposits. At present, Credit Suisse offers securities brokerage, wealth management, and investment consulting services to clients under its securities joint venture in the world’s second-largest economy. The decision to drop the plan was reached after preparation over several years, with insiders citing UBS’s ownership of a locally incorporated bank in China as key to the move. Credit Suisse declined to comment on the matter.
FAQs:
Why did Credit Suisse abandon its plans to set up a wholly owned local bank in China?
The bank opted to drop the plan to avoid a potential regulatory conflict that might arise due to its upcoming merger with UBS.
What would the establishment of a wholly owned local bank in China have enabled Credit Suisse to do?
It would have enabled the bank to expand its onshore wealth management business by establishing a branch network to draw deposits.
What financial services does Credit Suisse currently offer in China?
The bank presently offers wealth management, securities brokerage, and investment consulting services to clients under its securities joint venture.
What decision did UBS make that influenced Credit Suisse’s decision to drop its plan of setting up a locally incorporated bank in China?
UBS’s ownership of a locally incorporated bank in China was one of the reasons why Credit Suisse opted to abandon its plan.
How did the merger between Credit Suisse and UBS come about?
Swiss authorities engineered the merger, whereby UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion) in stock and to assume up to 5 billion francs in losses in March 2021.
Credit Suisse Abandons China Bank Plan to Steer Clear of Regulatory Conflict with UBS
Credit Suisse has abandoned plans to establish a locally incorporated bank in China due to concerns about potential regulatory conflicts resulting from its merger with UBS, according to sources with direct knowledge of the matter. The Swiss bank had been planning the move for several years with the aim of boosting its presence in the country and expanding its onshore wealth management business. However, Credit Suisse has now decided to abort the plan because UBS, which is acquiring Credit Suisse as part of a government-orchestrated rescue of its Swiss rival, already has a locally incorporated bank in China. In China, financial entities can apply for and get only one such license. Neither Credit Suisse nor UBS has commented on the report, and it remains unclear whether the local regulators have been informed of the decision.