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Dec. 3 (NBD) -- The China Securities Regulatory Commission last Friday announced that it had approved Swiss financial titan UBS Group AG (UBS)'s application to increase the company's stake in its securities joint venture in China, UBS Securities Co. Ltd. (UBS Securities), to 51 percent.

China has vowed to grant foreign investors wider access to its financial markets, including allowing foreign firms' 51-percent ownership of their brokerage ventures, up from the previous 49 percent.

Founded in 2006, UBS Securities is owned by UBS and four Chinese enterprises including state-owned asset manager China Guodian Capital Holdings and state-run food processing company China National Cereals, Oils and Foodstuffs Corp (COFCO).

UBS, which now holds a 24.99 percent stake in Beijing-based UBS Securities, will acquire the additional shares from China Guodian Capital Holdings and COFCO.

Upon the completion of related deals, UBS will become the first foreign financial institution in China which holds a majority stake in its local securities businesses.

UBS's chief executive officer Sergio Pietro Ermotti said that expanding business in China is the bank's strategic focus and the further opening of China’s financial market is a major opportunity for UBS's business in China, including its wealth management, investment banking as well as asset management.

Kathryn Shih, president of UBS Asia Pacific, noted that to gain a controlling stake in its China unit represents a significant milestone for UBS and also constitutes an important part of the Swiss bank's strategy in China. UBS and its important investment banking platform in China, UBS Securities, will strengthen business collaboration in the Asia-Pacific region, which is critical for the bank to provide overall solutions for its clients, Shih added.

Qian Yujun, general manager of UBS Securities, echoed Shih's views, saying that establishment of UBS Securities marks the first time that a foreign bank invested directly in a fully-licensed domestic securities firm, and after UBS takes majority stake in the broker, they can better seize the opportunities in Chinese capital market.

Fang Dongming, head of China equities at UBS, once stated that after UBS takes a controlling stake in the securities firm, the Swiss bank can develop more capital-based businesses in China such as derivatives and margin trading, in addition to current traditional brokerage services centering on investment research and sales.

It's foreseeable that after UBS Securities becomes the first foreign-controlled securities firm in China, there will be more such brokers to enter the competition in China's brokerage industry.

A non-banking chief with a top securities firm held that although foreign brokers will create, to some extent, a catfish effect in China, yet it remains relatively difficult for them to change the landscape of the country's securities industry in the short run.

Email: gaohan@nbd.com.cn