UBS is said to have connections with Chinese military companies that are under sanctions, as per a report by Finanz und Wirtschaft.
The Swiss banking giant is reportedly investing around $1 billion in two joint ventures with state-owned enterprises, specifically Avic Xi"an, a fighter jet manufacturer, and Hikvision, a surveillance camera supplier.
Both companies have been on the U.S. sanctions list since 2021. UBS maintains that it complies with all regulations and asserts that the securities can still be traded in markets outside the U.S., including China, as long as U.S. persons are not involved in the transactions.
UBS also highlights that the independent investment decisions made by the joint ventures for their Chinese clients do not violate U.S. sanctions, either directly or indirectly.
The situation raises concerns about potential retaliation from U.S. authorities, especially since UBS subsidiaries sold all shares in the sanctioned companies after the sanctions were imposed, yet the joint ventures continued to make significant purchases.