UBS has agreed to sacrifice the boardroom veto right that was part of its deal to take management control of Beijing Securities in order to get regulatory approval for its investment. In addition, the Swiss bank's management control of the brokerage will be established through a memorandum of understanding with other shareholders rather than a formal agreement, the South China Morning Post reported. The compromises are a response to considerable resistance to opening the country's troubled brokerages to foreign investment. The UBS deal, under which the bank agreed to pay US$210 million for a 20% stake and management control, represents a major step forward and could be seen as setting a precedent for similar deals. Up until now, foreign players have been limited to maximum 33% stakes in joint venture investment banks, with no license to trade A-shares.
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