(Yicai Global) May 11 -- The merger of Swiss financial giants UBS and Credit Suisse has upended the former’s application for a wholly-owned public fund license in China.

UBS declined to comment on the application’s progress, but several senior foreign asset managers and other sources familiar with the matter told Yicai Global that it would be suspended.

Before news of the banking merger broke, UBS had applied to the China Securities Regulatory Commission for a wholly foreign-owned public fund license and hired a Chinese public fund executive as the general fund manager, Yicai Global learned.

“After UBS acquires Credit Suisse, UBS will no longer meet China’s relevant regulatory requirements to set up another public fund in the country,” a senior executive at a foreign institutional asset manager said.

According to the Administrative Measures for Supervising Managers of Publicly Offered Securities Investment Funds issued by the CSRC last May, an entity can only be the shareholder of a publicly-offered securities investment fund, the controller of a second one, and the sole owner of a third.

So after the merger is completed, UBS will obtain the 20 percent stake Credit Suisse owns in ICBC Credit Suisse Asset Management, a joint venture between Industrial and Commercial Bank of China and Credit Suisse, so it will no longer be eligible to establish another public fund as it already holds a 49 percent stake in JV public fund UBS SDIC and a 67 percent stake in UBS Security China.

On the other hand, UBS could also sit back and enjoy the advantages of being a shareholder of cash cow ICBC Credit Suisse and scrap the plans to set up a new wholly-owned entity, which would take time to turn profitable anyway, the senior executive added.

ICBC Credit Suisse is one of China’s leading public funds. It had total asset under management of CNY1.72 trillion (USD248 billion) at the end of last year, far exceeding the CNY237 billion (USD34.2 billion) of UBS SDIC.

Editor: Tang Shihua, Futura Costaglione