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Credit Suisse has struck a deal to buy Reuters’ Chinese joint venture partner


© Reuters. FILE PHOTO: The Swiss national flag flies in front of the Credit Suisse headquarters in Zurich, Switzerland, July 27, 2022. REUTERS/Arnd Wiegmann

Posted by Selena Lee

HONG KONG (Reuters) – Credit Suisse said on Thursday it had struck a deal to buy out its local partner in a Chinese securities joint venture, reaffirming its commitment to the world’s second-largest economy amid doubts over the scandal-hit Swiss bank’s plans.

The bank has reached an agreement to buy Founder Securities’ 49% stake in Credit Suisse Securities (China) for 1.14 billion yuan ($163.92 million), according to the founder’s filing with the Shanghai Stock Exchange, beginning the process of turning the venture into a wholly-owned operation.

The deal comes days after senior management discussed the bank’s growth strategy at a meeting in Singapore.

“China is a key part of our Asia Pacific and global strategy,” Carsten Stoer, CEO of Greater China at Credit Suisse, said in a statement.

Global peers such as JPMorgan and Goldman Sachs (NYSE: ) have secured a head start over the past two years by turning their Chinese joint ventures into wholly owned companies.

The deal comes more than two years after Credit Suisse took a controlling stake in the company through an equity injection in June 2020, as it showed ambitions to take full control of the unit, which the Swiss bank plans to use to tap into China’s huge wealth market. . .

But the path to acquiring the rest of the business was met with setbacks.

Several of the division’s senior executives, including CFO Annie Qiu, chief compliance officer Xu Yang and chief information officer Larry Tung, raised questions about the company’s stability and regulatory outlook for new business.

“We remain committed to our China business because we understand that this is … a long-term investment and commitment, and whatever the procedures, timelines or steps that need to be taken, we’re going through it carefully,” Stoyer told Reuters.

“Our overall approach and our commitment has not wavered in any way.”

The founder’s ownership restructuring had a significant impact on the acquisition talks, as both sides had to restart the process when new owners of the Chinese securities firm emerged, according to a source with direct knowledge of the matter.

In April, a consortium led by Chinese insurer Ping An got the green light to buy a majority stake in the restructured Founder Group.

Both parties aim to complete the stake transfer no earlier than the first quarter of 2023, the source added.

Credit Suisse declined to comment on the timing and implications of the founder’s change of ownership. The founder did not immediately respond to a request for comment.

Credit Suisse’s Asia Pacific head of wealth told Reuters last week that it plans to launch a business in China next year targeting the 29 trillion yuan ($4.2 trillion) market.

Once the buyout is completed, Credit Suisse will go through the filing process with China’s securities regulator. Meanwhile, the bank is working in parallel to acquire a license that will allow it to offer wealth management services to local clients, which requires review by the authorities.

The expansion plan comes as the bank cuts jobs and costs elsewhere as it tries to recover from a series of losses and scandals. Reuters reported in August that Switzerland’s second-biggest bank was considering cutting about 5,000 jobs across the group – about one in 10.

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