Credit Suisse has reportedly put a halt to its long-standing plan to establish a locally incorporated bank in China to sidestep regulatory conflict. This decision has come in light of UBS’s acquisition of the beleaguered Swiss lender for $3.25 billion since UBS (NYSE:UBS) already operates a local bank in China, as per sources cited by Reuters. Chinese regulatory rules stipulate that a financial entity can only hold one license for a locally incorporated bank.
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This situation could prompt Credit Suisse to reconsider its other business pursuits in China to prevent overlaps in areas like asset management and brokerages. The lender’s 51%-owned securities joint venture in China is speculated to be sold off to steer clear of violating license ownership rules. International firms are permitted to hold just one majority-owned securities firm in China, and UBS already possesses a 67% stake in a securities joint venture in the nation.
Turning to Wall Street, analysts have a Hold consensus rating on UBS stock based on five Buys, three Holds, and three Sells assigned in the past three months, as indicated by the graphic above. Nevertheless, the average price target of $25.24 per share implies 33.72% upside potential.
