UBS sees ‘business as normal’ as it contests Hong Kong suspension

HONG KONG (Reuters) – UBS (UBSG.S) has told staff that it is “business as normal”, after the Swiss bank revealed on Friday it is fighting an 18-month suspension in Hong Kong from leading initial public offerings (IPOs).

In an internal memo sent by Andrea Orcel and David Chin, global and Asia-Pacific heads of UBS’s investment bank, respectively, and seen by Reuters, the bank told staff that until its appeal was heard “we are business as normal” and that it could still sponsor IPOs.

UBS disclosed the suspension by Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), in its annual report released on Friday, and added it planned to appeal the decision as well as a HK$119 million ($15.18 million) fine handed out to it.

The bank did not specify what led to the suspension and the fine but said the regulator had been investigating UBS’s role as a sponsor of some IPOs listed on the Hong Kong Stock Exchange and that the actions related to one of the offerings under investigation.

UBS, on Monday, declined to comment on the memo.

The proposed punishments stem from an investigation by the SFC into the listing of China Forestry in 2009. The company was suspended in 2011 and is now being wound down.

The China Forestry IPO was sponsored by UBS and Standard Chartered (STAN.L). On Friday, Hong Kong’s Securities and Futures Appeals Tribunal granted the two banks an extension for their appeals against the SFC’s actions, but did not specify the punishments.

Standard Chartered, which closed its Hong Kong equities unit in 2015, declined to comment.

UBS has been a leading sponsor of IPOs for each of the past 10 years, sponsoring 10 per cent of all companies that have listed on Hong Kong’s main board over that period, according to data from Dealogic.

Since the news broke in 2016 of the SFC’s investigation into both banks, UBS’s sponsorship share has fallen to 3 per cent of total main board IPOs in 2016 and 2 percent in 2017.