UBS dials back China fund plans on costs, grim outlook
UBS Group AG is postponing plans to build its own mutual fund business in mainland China due to high costs and a dim profit outlook, people familiar with the matter said.
The Swiss bank will instead rely on existing joint ventures to expand in China's mutual fund industry following the acquisition of Credit Suisse last year, the people said, requesting not to be identified because the matter is private.
Establishing a wholly-owned fund management firm would require large capital commitments, while the chances of turning a profit in the near term remain low, the people said. The bank had been contemplating a stand-alone fund platform after China lifted foreign ownership restrictions in 2020.
A media representative for the bank declined to comment.
With the shift, UBS is taking a more conservative approach compared with other Wall Street firms that have invested more money and resources to win a bigger slice of the 27 trillion yuan ($3.73 trillion) market. Morgan Stanley and JPMorgan Chase & Co. have taken 100% ownership of their mutual fund joint ventures to maintain better control, while BlackRock Inc. and Fidelity International chose to build a new wholly-owned business from scratch.
At the same time, global asset managers are increasingly emphasizing the need for profitability in China as many struggle to build market share against the nation's domestic banking giants. UBS has also been consolidating functions and operations following the acquisition of Credit Suisse last year.
UBS already owns 49% of a
