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No change in China expansion plans, says UBS

By Bi Xiaoning (China Daily)
Updated: 2009-04-21 08:02

Switzerland's largest bank UBS is committed to expansion plans in China despite several cost reduction initiatives undertaken globally due to the effects of the financial downturn, a company executive told China Daily during an exclusive interview.

"We will reduce the total size of the business globally, but not in China," Lord Brittan, vice-chairman of UBS Investment Bank, said.

UBS posted a $18 billion net loss in 2008 and failed to show positive signs this year.

UBS said it was likely to post $1.76 billion in net losses for the first quarter, well below market expectations. It also announced that 8,700 people would be laid off and that operating costs would be cut by 15 percent by 2010.

"The greatest challenge the company faces is in cost reduction, especially, reducing the number of people we employ (but) China is the market where we will enhance rather than retreat. We employ a lot of people here and will continue to do so," Brittan said.

According to the research firm Dealogic, UBS was ranked first in 2008 in terms of business revenue related to Chinese companies's overseas moves. This was from its investment banking, equities, and mergers and acquisitions units.

UBS also claimed it was the No 1 investment bank in the Asia-Pacific region for 2007 and 2008 in terms of revenue. The company said it would maintain that in Q1 of this year.

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Investment banks at home and abroad have seen their businesses shrinking since China suspended initial public offerings in mid-September of 2008. They have struggled to find other profitable businesses to supplement the loss. UBS has done that by becoming active in the bonds issuance market in China.

In 2008, UBS Securities closed 13 bond deals in China and was ranked first in terms of financial bonds underwriting.

In addition, UBS was the largest qualified foreign institutional investor (QFII) with a $1-billion quota. It has since applied for an increase in the quota by $500 million.

To be sure, UBS is also actively preparing for the resumption of the IPO market.

"The IPO market will open up. We have a good pipeline now and are ready to move as soon as the conditions permit. The necessary conditions include both in regulatory as well as market terms," said Brittan.

UBS has been in China for around 20 years. It now provides investment banking, wealth management and asset management services through UBS Securities, bank branches and UBS SDIC Fund Management Company.

"These entities have achieved synergy and are well positioned to expand. Yet, they are still quite young and need a longer term to integrate the business according to our global strategy," said Brittan.