Updated February 26th, 2024 at 09:12 IST

Ant Group edges out Citadel for Credit Suisse's China unit, regulatory approval looms

UBS now faces a challenging decision: select Ant's higher bid despite potential regulatory hurdles, or choose Citadel's lower but likely-to-be-approved offer.

Reported by: Business Desk
UBS revamps leadership in Credit Suisse integration strategy | Image:PTI
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Citadel Securities China bid: Chinese fintech giant Ant Group has emerged as the frontrunner in the acquisition of Credit Suisse's investment banking venture in China, news agency Bloomberg reported, quoting people familiar with the matter. However, the deal's fate hinges on navigating a complex regulatory landscape that favours foreign buyers, the report said.

Ant seeks to leverage the acquisition to establish a securities business within China, but regulatory scrutiny may pose a significant hurdle. As the current owner of Credit Suisse, UBS faces a challenging decision: select Ant's higher bid despite potential regulatory roadblocks, or choose Citadel's lower but likely-to-be-approved offer.

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Citadel's interest

The US market maker submitted its bid in December, offering about 1.5 billion yuan ($208.47 million) to 2 billion yuan, indicating its ambition to gain a foothold in China's burgeoning domestic securities market. The deal unfolds against a backdrop of capital outflow from China's A-share market and stricter initial public offering regulations.

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In 2023, the Swiss authorities hastily arranged UBS' takeover of Credit Suisse, the biggest bank merger since the 2008 global financial crisis, to avert Credit Suisse's collapse. The deal resulted in UBS owning two majority-owned securities firms in China, where a company is only permitted to operate one.

Citadel Securities CEO Peng Zhao told Reuters in November the US largest market maker was "actively exploring" establishing a licensed onshore business in China. Credit Suisse's China unit originated as a joint venture with Founder Securities, with Credit Suisse holding a majority stake.

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Ant Group is currently undergoing regulatory restructuring to transform into a fully licensed financial holding company. The buyout of Founder Securities by Credit Suisse, a prerequisite for the Credit Suisse-UBS merger, remains subject to regulatory approval. Global financial institutions like Citigroup also expressed interest in acquiring the unit.

(With Reuters inputs.)

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Published February 26th, 2024 at 09:12 IST