Exclusive: Credit Suisse puts up for sale a brokerage project in China

HONG KONG/SHANGHAI (Reuters) – Credit Suisse (CSGN.S) and its joint venture partner are looking for buyers for their Chinese securities brokerage business due to the Swiss bank’s takeover of rival UBS (UBSG.S), two people said. with direct knowledge of the matter.

They added that Citigroup (CN) had at one point expressed interest in acquiring Credit Suisse Securities China (CSS).

Citi, whose CEO Gene Fraser was in China this week, is setting up a stock brokerage in China. One person said that the company had hoped to accelerate development through acquisition but decided to stick to its original plan to grow the business organically.

According to China’s securities regulations, a single entity cannot obtain two licenses for majority-owned brokerage firms. UBS holds a 67% stake in a profitable securities venture with asset management owned by the state of Beijing.

Credit Suisse owns 51% of loss-making CSS and closed a deal to buy its partner Founder Securities (601901.SS) last year. This transaction has not yet received approval from Chinese regulators.

The sources requested anonymity due to the sensitivity of the matter.

UBS and a spokesperson representing both Credit Suisse and CSS declined to comment. City declined to comment.

Neither the Securities founder nor the China Securities Regulatory Commission immediately responded to Reuters requests for comment.

CSS was incorporated in 2008 in Beijing with Credit Suisse initially owning 33.3% before raising its stake to 51% in 2020. In addition to brokerage, it is licensed to conduct underwriting, sponsorship, proprietary trading and act as an investment advisor.

It recorded a net loss of 254 million yuan ($36 million) in 2022 and had 234 employees at the end of last year, according to its annual report. The potential transaction value of a business cannot be known immediately.

UBS plans to announce the end of its relationship with Credit Suisse as soon as next Monday.

The new group will have a lot of work to do in consolidating the banks’ operations in China as they both own investment banking, wealth and money management businesses.

Sources also said that Credit Suisse canceled plans to set up a local bank in China due to a potential regulatory struggle arising from the UBS takeover.

Additional reporting by Selina Lee in Hong Kong and Engin Tham in Shanghai; Editing by Sumit Chatterjee and Edwina Gibbs

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