UPDATE 3-Haitong Intl Securities cuts business ties with UBS after pig commentReuters | Hong Kong | Updated: 14-06-2019 14:41 IST | Created: 14-06-2019 14:40 IST
Haitong International Securities Group Ltd said it has cut ties with UBS Group AG, following a comment about Chinese pigs made by the Swiss bank's global chief economist that was perceived by some as a racist slur.
Haitong International has suspended all collaboration with UBS, including corporate finance and trading, the Hong Kong-listed firm said in an email to Reuters on Friday. "There is not a clear timetable on when to resume the collaboration, which is subject to the management's decision," Haitong International said.
Paul Donovan, global chief economist of UBS's wealth management department since 2016, said in a podcast on Wednesday that consumer prices in China had risen mainly due to sickness among pigs. "Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China," Donovan said.
Some people interpreted his comment as a reference to people, not livestock. No other Chinese brokerages and financial institutions collaborating with UBS have cut ties, but some in the Chinese financial community have expressed their displeasure and have rejected an apology from UBS.
The stakes are high for foreign companies looking to expand their presence in China as the world's second-largest economy further opens up its financial sector. In December last year, UBS became the first foreign bank in China to get official approval to acquire a controlling stake in its local securities joint venture.
Lin Yong, chief executive of Haitong International - the Hong Kong unit of Chinese brokerage Haitong Securities Co - earlier announced the decision to freeze ties with UBS on his personal WeChat account, a Haitong employee who saw the post told Reuters. It was also announced in an email circulated among Haitong International staff, a second Haitong employee said.
UBS said it apologised unreservedly for any misunderstanding caused by Donovan's innocently intended comments. "We have removed the audio comment from circulation. To be clear, this comment was about inflation and Chinese consumer prices rising, which was driven by higher prices for pork," UBS said in a statement emailed to Reuters.
The bank said it was enhancing its "internal processes" to avoid any recurrence of such an incident, adding: "We remain fully committed to investing in China." 'ARROGANT'
The Chinese Securities Association of Hong Kong (HKCSA), whose 124 member firms include offshore subsidiaries of Chinese brokerages and fund houses, said it was not aware if any other members cutting ties with UBS, when contacted by Reuters on Friday. Haitong International's Lin is the president of the HKCSA.
The association had demanded on Thursday that UBS dismiss Donovan and issue a formal apology from the board, while calling companies and individuals to consider carefully when it comes to conducting business with UBS. "Regrettably, this information (UBS' apology) is not only insincere, but also arrogant, again hurting the feelings of Chinese people," it said in an open letter to the UBS board.
Lin did not respond to emails and telephone calls seeking comment. The Haitong employees were not authorised to speak to media and declined to be identified. When asked about Haitong International's decision on Friday, UBS re-sent the apology it had previously issued without providing any further comment.
African swine fever, a disease deadly to pigs, is ravaging herds across Asia. China has reported more than 120 outbreaks since it was first detected in the country in August. ($1 = 7.8279 Hong Kong dollars)