Recently, the board of directors of UBS Securities Limited (hereinafter referred to as "UBS Securities") underwent adjustments. Hu Zhiling, former chairman of Credit Suisse Securities (China) Co., Ltd. (hereinafter referred to as "Credit Suisse Securities"), has been appointed as Vice Chairman of UBS Securities and Chairman of UBS Global Investment Banking in China since July 11th.
Considering that before this, the board of directors of UBS Securities had not established the position of Vice Chairman. At the same time, UBS Group just announced the sale of most of its shares in Credit Suisse Securities to Beijing State owned Assets Management Co., Ltd. (hereinafter referred to as "Beijing State owned Assets Company") at the end of June. Earlier this year, Hu Zhilu stepped down as chairman of Credit Suisse Securities in April. In contrast, the adjustment of UBS Securities this time may be a special personnel arrangement in the context of UBS Group's acquisition and disposal of Swiss Credit Suisse's interbank assets in China.
Behind the personnel adjustment, there is a hidden agenda
As the "soul figure" of Credit Suisse AG's business expansion in China, Hu Zhiling has nearly 30 years of experience in the financial industry, including over 20 years at Credit Suisse, where he is a senior Chinese banker in the industry.
In 2001, China successfully joined the World Trade Organization (WTO), and international investment banks began to expand their presence in the Chinese market, with Credit Suisse being one of them. Hu Zhiling was employed by Credit Suisse at that time, and thus entered the relevant work of Credit Suisse in exploring the Chinese market. Due to outstanding abilities, he became the youngest Managing Director of Credit Suisse's global investment banking department at that time.
From 2007 to 2016, Hu Zhiling served as one of the main sponsor signatories for Credit Suisse (Hong Kong) Limited's application for listing on the Hong Kong Stock Exchange. He led the trading team to develop the company's listing plan, make key decisions, and was responsible for guiding and resolving major risk factors involved.
At the same time, Hu Zhiling has served as the head of investment banking business at Credit Suisse China, vice chairman of Credit Suisse China, and CEO of Credit Suisse China, leading Credit Suisse to further expand its various businesses in China. During this period, Credit Suisse expanded its securities business in China and established a joint venture called Credit Suisse Founder. Hu Zhiling is the representative of Credit Suisse and continues to lead and supervise the establishment and operation of Credit Suisse Founder, working together to steadily advance Credit Suisse's overall strategy in China. After the further expansion of financial openness to the outside world, Credit Suisse increased its capital and became the controlling shareholder of Credit Suisse Founder (predecessor of Credit Suisse Securities), and Hu Zhiling subsequently became the chairman of Credit Suisse Founder. After the wholly-owned subsidiary of Credit Suisse, Credit Suisse Founder, was renamed Credit Suisse Securities, Hu Zhilu became the chairman of Credit Suisse Securities.
Based on this resume, for foreign investment banks, Hu Zhiling may not only be the current chairman of Credit Suisse Securities. In fact, industry insiders have suggested that attention should be paid to the timing of Hu Zhilan's public resignation as chairman of Credit Suisse Securities. "Generally speaking, as a talent intensive industry, mergers and acquisitions in securities companies may involve non compete issues with core personnel
Since the beginning of this year, several foreign institutions, including the globally renowned market making mall Burger Securities and the US based Huaping Investment Group, have successively negotiated the equity of Credit Suisse Securities. But in the following months, negotiations with foreign institutions progressed slowly. According to Tianyancha information, Hu Zhilu stepped down as chairman of Credit Suisse Securities in April this year. At the end of June, UBS Group and Fangzheng Securities (602901. SH) reached a tripartite agreement with Beijing State owned Assets Supervision and Administration Corporation to sell a total of 85.01% equity of Credit Suisse Securities for a price of 1.5355 billion yuan. After the transaction is completed, UBS Group and Beijing State owned Assets Supervision and Administration Corporation will respectively hold 14.99% and 85.01% equity of Credit Suisse Securities.
Currently, with the aforementioned personnel adjustments, another arrangement behind the equity trading of Credit Suisse Securities has also surfaced, namely the former chairman of Credit Suisse Securities, Hu Zhiling, joining UBS Securities. UBS Securities mentioned, "Over the past year, Hu Zhiling has been deeply involved in the integration work of UBS and Credit Suisse China, actively promoting the integration and development of China's business platform." UBS Group CEO Ansijie also stated, "China is an important market for UBS. UBS has been operating in mainland China for 35 years and will continue to expand its business in this important market." In this context, it is reasonable for Hu Zhiling to "join" UBS Securities.
UBS Securities' performance under pressure
Behind the personnel adjustments and equity transactions mentioned above, how UBS Group arranges its securities business in China has become a focus of market attention. Previously, Caixin News Agency cited anonymous sources as saying that behind the agreement reached with Beijing State owned Assets Supervision and Administration Corporation, "price is not the core factor for who will acquire the equity of Credit Suisse Securities. UBS Group hopes to achieve 100% control of UBS Securities by replacing the equity of Credit Suisse Securities
UBS Securities' current controlling shareholder is UBS Group, holding 67% of the shares, with Beijing State owned Assets Supervision and Administration Corporation holding the remaining 33%. Although no stock swap plan has been implemented in the trading of Credit Suisse Securities, a spokesperson for UBS Group stated, "If the timing is right, we do not rule out considering increasing our holdings
Behind the equity issue, it should also be noted that the current performance of UBS Securities is not ideal.
Data shows that as of December 31, 2023, UBS Securities had a total consolidated assets of 13.638 billion yuan and owner's equity of 2.338 billion yuan, a slight increase from 2022. In terms of performance, facing the overall weak industry environment in 2023, UBS Securities is under significant pressure. For the whole year of 2023, UBS Securities achieved a revenue of about 955 million yuan, a year-on-year decrease of 19%. The net profit attributable to the owners of the parent company was about 18.91 million yuan, a significant year-on-year decrease of over 90%. In 2022, the data was 224 million yuan. Furthermore, in 2023, UBS Securities' net income from fees and commissions was approximately 800 million yuan, a year-on-year decrease of 24%. Among them, the net income from brokerage fees was about 420 million yuan, and the net income from investment banking fees was about 100 million yuan, with a year-on-year decline of about 33% and 45% respectively.
Horizontally compared, as a foreign-owned securities firm, Goldman Sachs (China) Securities had a revenue of 1.539 billion yuan in 2023, an increase of 163.98% compared to 2022; Net profit was 193 million yuan, an increase of 135.37% compared to 2022. HSBC Qianhai Securities achieved a revenue of 727 million yuan in 2023, a year-on-year increase of 44.25%; Achieve a net profit of 150 million yuan, turning losses into profits year-on-year.
How to stabilize performance and further expand layout has become an important issue for UBS Securities in the future.
Yu Fenghui, a specially invited researcher at the China Financial Think Tank, mentioned: "The recent board and personnel adjustments of UBS Securities, or part of UBS Securities' internal management structure adjustments, are aimed at better adapting to the new market environment and company strategy. As an experienced financial industry professional, Hu Zhilu's appointment as vice chairman means that he will have more opportunities to participate in the company's decision-making and further promote the company's strategic development. This also reflects that UBS Securities may hope to strengthen the integration of its business in China through this approach, in order to better align with the overall strategy of UBS Group. However, in the future, it is still necessary to pay attention to whether UBS Securities has corresponding adjustments and changes in business, strategy, resource allocation, and other aspects