Switzerland's national flag flies in front of the headquarters of Swiss bank Credit Suisse in Zurich
Switzerland's national flag flies in front of the headquarters of Swiss bank Credit Suisse in Zurich, Switzerland July 27, 2022.

Credit Suisse said on Thursday it had struck a deal to buy out its local partner in a Chinese securities joint venture, reaffirming its commitment to the world's second-biggest economy amid doubts about the scandal-hit Swiss bank's plans.

The bank reached an agreement to buy Founder Securities' 49% stake in the Credit Suisse Securities (China) venture for 1.14 billion yuan ($163.92 million), according to a Founder filing on the Shanghai Stock Exchange, starting the process of turning the venture into a fully-owned operation.

The deal comes days after top management discussed the bank's growth strategy at a meeting in Singapore.

"China is a key part of our Asia Pacific and global strategy," Carsten Stoehr, CEO of Greater China at Credit Suisse, said in a statement.

Global peers such as J.P.Morgan and Goldman Sachs had secured a head start in the last two years by converting their Chinese joint ventures into fully-owned operations.

The deal comes more than two years after Credit Suisse gained a majority holding through a capital injection into the venture in June 2020, when it signalled ambitions to take full control of the unit, with which the Swiss bank planned to tap into China's massive wealth market.

But the journey to acquire the rest of the business faced setbacks.

Several senior executive departures at the unit, including chief financial officer Annie Qiu, compliance head Xu Yang and chief information officer Larry Tung, raised questions about stability at the venture and the prospect of it meeting regulatory requirements to launch new business.

"We continue to be committed to our China business because we understand that these are ... long-term investments and commitments, and whatever the procedures, timing or steps that need to be taken, we go through diligently," Stoehr told Reuters.

"Our overall approach and our commitment has not in any way been wavering."

An ownership restructuring at Founder had a material impact on the acquisition negotiations as both sides had to restart the process when new owners emerged for the Chinese securities firm, according to a source with direct knowledge of the matter.

In April, a consortium led by Chinese insurer Ping An was given a green light to buy a majority holding in the restructured Founder Group.

Both sides aim to complete the stake transfer in the first quarter of 2023 at the earliest, the source added.

Credit Suisse declined to comment on the timeline and the impact of ownership change at Founder. Founder did not immediately respond to a request for comment.

Credit Suisse's Asia Pacific wealth head told Reuters last week it aimed to launch a wealth business in China next year, targeting a 29 trillion yuan ($4.2 trillion) market.

Once the buyout is completed, Credit Suisse will go through a filing process with China's securities regulator. Meanwhile, the bank is in parallel working to acquire a licence that would allow it to offer wealth management services to local clients, which requires onsite inspection by the authority.

The expansion plan comes as the bank is cutting jobs and costs elsewhere in its efforts to recover from a string of losses and scandals. Reuters reported in August that Switzerland's second-biggest bank was considering cutting about 5,000 jobs across the group - around one job in 10.

($1 = 6.9547 Chinese yuan renminbi)