UBS suffers setback in Indian expansion

by Gill Montia

Story link: UBS suffers setback in Indian expansion

UBS, the Swiss investment bank, has suffered a serious setback in its plans to expand in India.

The Reserve Bank of India, the country’s central bank, has opposed its plans to purchase the local mutual funds unit of Standard Chartered, for £60 million.

No statement has been made by the Reserve Bank explaining its actions, but according to local press reports, it did not see UBS as a “fit and proper” owner for the funds.

UBS is the world’s largest wealth manager and the Standard Chartered business it sought to acquire manages around $3.5 billion of assets.

Other reports suggest that the deal was vetoed on a technicality and that UBS had failed to answer questions about transactions linked to an Indian individual who is being investigated by the country’s tax authorities.

Standard Chartered has put the business back up for sale and is reported to have begun talks with Goldman Sachs, Morgan Stanley and Credit Suisse.

UBS’s existing Indian operations include equities trading, mergers and acquisitions advice, and a business processing centre.

The mutual funds business would have given the bank an opportunity to take advantage of the fast-growing disposable income of India’s middle-class.

However, UBS has indicated that it will seek other ways of developing its business in the country, which has shown a strong demand for financial services in the past two years.

Suggestions that the failure of the deal relates to UBS’s exposure to US sub-prime mortgage debt have been denied by the bank, although it has been the hardest-hit of the international investment banks.