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UBS Hit With IPO Ban In Hong Kong

Swiss banking giant UBS is reportedly banned in Hong Kong from sponsoring initial public offerings (IPOs), reports in Financial Times said Friday (March 9).

The publication cited UBS’s annual report, which revealed the 18-month ban from the Hong Kong Securities and Futures Commission. The regulator also fined UBS $119 million following an investigation into its sponsorship of IPOs for companies listing on the Hong Kong Stock Exchange.

In relation to “one of the offerings under investigation,” the Securities and Futures Commission issued the fine and suspension, though reports noted that UBS did not give more details on the matter. The bank said it will appeal the ruling.

According to reports, the ban comes two years after UBS warned it was also facing a suspension of corporate advisory services in Hong Kong. The bank also faced an investigation in Belgium in 2016 for money laundering allegations.

Separate reports in Bloomberg said the 2016 disclosure of its potential suspension related to its services for China Forestry Holdings. The logging company collapsed after its 2009 IPO, which was also aided by Standard Chartered), following the discovery of “financial irregularities,” Bloomberg said.

Hong Kong is an increasingly attractive target for companies looking to go public, especially firms in China. Reports in the South China Morning Post last September said that Chinese businesses are looking at Hong Kong, as well as the U.S., for IPOs. Also, PwC assurance partner Jianbin Gao told the publication that he expects an increase in FinTech IPOs in these jurisdictions in particular.

According to Bloomberg, Hong Kong is expected to sanction more financial institutions for their work on IPOs, especially for public offerings that occurred before 2013, when the SFC moved to make IPO sponsors criminally liable for false statements. The SFC said last year it was investigating 15 financial companies.


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