FINANCIALS: UBS: Small China Sale, Immaterial But Helpful

UBS (UBS: A3 dev/A-/A) is making a further small divestment in China as it looks to streamline and simplify the group post-the CS rescue. Looks immaterial for spreads but helpful to maintain political position in China, as well as some commercial exposure. UBS spreads have broadly tracked the sector recently and we see little reason for this to change here.

• Citywire is reporting UBS has sold 36% of Credit Suisse Securities (China) to BSAM (Beijing State-Owned Assets Management) for USD91.4m. Founder Securities, the previous JV partner has sold its 49% similarly (for USD124m). This leave UBS holding 14.99%, with the balance at BSAM.
• UBS already has an onshore presence in China so there were, in common with a range of other markets, a duplication. We’d expect to see a range of these small deals as the lengthy and complex process of building a future-fit UBS is conducted.
• UBS spreads have widened 13bp in the last month but are still 38bp tighter YTD, broadly tracking the peer group (€IG banks: +14bp and -34bp). We don’t see this as credit-moving but every little helps. UBS reports 2Q24 results on 14-Aug.