UBS faces uphill battle to regain ground after HK IPO ban lifted

This article is more than 12 months old

Jan 21, 2020 06:00 am

HONG KONG: UBS Group AG is likely to have a hard time regaining ground lost in the 10 months it was banned from the big-money business of sponsoring initial public offerings (IPOs) in Hong Kong, where Chinese rivals have become formidable players, bankers and analysts said.

The Swiss bank's year-long ban ended two months early after regulators last week said standards had improved since it found due diligence failings during an industry-wide probe that has led to HK$900 million (S$156 million) in fines.

"After the fines, international banks - especially UBS - have the problem of clients perceiving due diligence processes as more rigorous and protracted with an international bank than a Chinese firm, making the latter more attractive," said Mr Benjamin Quinlan, chief executive of consultancy Quinlan & Associates.

Equity capital markets- including IPO sponsorship - on average make up a third of investment banks' fee pool in Asia-Pacific, or a quarter globally.

Hong Kong ranked third last year for IPOs behind the Saudi Exchange and Nasdaq, raising US$25 billion (S$33.7 billon).

Among banks in Hong Kong, UBS ranked in the top 10 in each of the past 15 years bar two, which came in the four years since the lender first disclosed the probe, data showed. - REUTERS