UBS Exposure to Evergrande ‘Immaterial,’ CEO Hamers Says
UBS Plays Down Evergrande Exposure as Dollar Bond Doubts Grow
(Bloomberg) -- UBS Group AG’s exposure to stricken property developer China Evergrande Group is “immaterial” and limited to the execution of collateral calls on margin loans, Chief Executive Officer Ralph Hamers said Thursday.
The Chinese company’s financial difficulties “have not been keeping me up at night,” Hamers said, who heads a bank with one of the top wealth management businesses in Asia. UBS has made some margin calls related to Evergrande but these have been “well executed,” he said during a Bank of America Corp. conference on Thursday.
“If you just look at the Chinese construction sector, because I don’t think this is an Evergrande issue per se only, even there the exposure it is all on the client side in funds which are widely diversified,” Hamers said. “So even there that will not lead to real issues.”
The debt-laden property giant has caused jitters on global markets over doubts that it will be able to pay its creditors, including holders of a dollar-denominated bond due Thursday. The extent to which global banks are exposed to the firm isn’t yet clear, though UBS rivals Credit Suisse Group AG and Citigroup Inc. have indicated they’ve limited risk of losses from the developer.
Chinese regulators have told Evergrande to avoid a near-term default on dollar bonds, and communicate pro-actively with bondholders, people familiar with the matter said.
Hamers said that he sees what’s happening with Evergrande in terms of broader policy changes underway in China.
“In terms of driving affordable housing, driving affordable and accessible healthcare, driving affordable education, all related to generating and delivering on the new policy of common prosperity, which in and of itself is something I can fully understand,” he said.
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