One of China’s biggest corporations has excluded UBS from a bond deal after a wayward comment by the Swiss bank's chief economist.
China Railway Construction Corp. (CRCC) will refrain from entrusting UBS as the coordinator of a bond emission. The reason for the decision was a comment by UBS economist Paul Donovan about the effect of the swine flu epidemic, according to «Bloomberg». The firm will use Citigroup, HSBC and ICBC instead. UBS didn’t comment.
The Chinese Securities Association last week reacted furiously to the comment and demanded that UBS should sack the economist for what it perceived as a racist slur. Haiton Securities, a Chinese brokerage, stopped its business with Switzerland’s largest bank. The bank and Donovan have apologized for the comment.
The comment and ensuing fury come at a bad time for the bank, which last year received a license to buy a majority in its local joint venture, the first foreign bank to receive this right. UBS has dedicated China as a strategic growth market.
