Credit Suisse logo displayed on smartphone and UBS logo on background.
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Credit Suisse scrapped plans to establish a locally established bank in China to avoid potential legal conflicts arising from the merger with UBSsaid two sources with direct knowledge of the matter.
Credit Suisse has been planning for years to set up a wholly owned local bank in China to strengthen its presence in the country by allowing it to establish a network branches to withdraw deposits and expand domestic asset management business.
The struggling Swiss bank is now providing wealth management, stockbroking and investment advisory services in the world’s second-largest economy to clients in its securities ventures.
Two sources said that after years of preparation, Credit Suisse has now decided to cancel its plan to apply for a license to set up so-called local consolidated banks.
Sources said the reason behind the decision to cancel the plan was that UBS, which was acquiring Credit Suisse as part of a government-sanctioned rescue of its Swiss rival, had a bank. was established in China.
In China, a financial institution can only apply for and receive such a license.
Credit Suisse and UBS declined to comment. China’s banking regulator, the National Financial Conduct Authority, did not immediately respond to Reuters’ request for comment.
It was not immediately clear whether local regulators had been notified of the decision, but one of the sources said the move to cancel the plan had been communicated to local staff at the bank.
Credit Suisse’s decision to forgo its local banking scheme in China could set the stage for similar moves by the bank and UBS in other businesses such as asset management and brokerage, where both have operating units, so as not to violate regulations.
UBS, twice the size of Credit Suisse in assets, agreed to buy its rival for 3 billion Swiss francs ($3.3 billion) in shares and accept losses of up to 5 billion francs in March, in a merger orchestrated by the Swiss authorities to avoid contagion in global banking.
