UBS chairman Axel Weber: We're doubling down on China
- UBS has a long-term commitment to China, said Chairman Axel Weber
- The Swiss bank is launching its first Chinese private fund by the end of the year
- Weber said he believed China would be able to engineer a transformation of its financial system
S&P Global might have just downgraded China's credit rating, but Switzerland's largest bank remained confident about the prospects of the world's second-largest economy.
"When many of the markets looked at China as being volatile, we actually decided to double our headcount in mainland China, which shows a long-term continuous commitment despite the fact that there were some headwinds at the time," Axel Weber, chairman of UBS Group, told CNBC's "The Rundown" on Friday.
Concerns over whether the economic slowdown in China will result in a hard landing have faded somewhat recently, but the mainland's economic data remained closely watched, especially after trade figures for August showed slowing exports.
S&P also downgraded China's long-term sovereign credit rating by one notch on Thursday to A+ from AA-, citing increasing risks from the country's rapid build-up of credit.
Still, China's gross domestic product growth in the second quarter beat expectations, coming in at 6.9 percent compared with a year earlier and topping the 6.8 percent forecast. Beijing has set a target of around 6.5 percent for the year.
"In terms of where China's going now, the economic situation is clearly improving since the second half of last year and we see that in our business," Weber said.
The Swiss bank said earlier this month that it would launch its first Chinese private fund by year-end.
Weber told CNBC that an asset management license — which allows the company to manage money for institutions and high-net-worth investors on the mainland — was an important development for the UBS.
"Increasingly, mainland China and Hong Kong are collaborating, with the bond connect, with the stock connect and there is even talk about an ETF connect. As we get international clients, to be able to invest in mainland China through the gateway of Hong Kong ... we can replicate our international wealth management products," he said. "This is something we couldn't do in the past."
With stability a key focus ahead of China's 19th National Congress of the Communist Party on Oct. 18, Weber also weighed in on whether things could take a turn for the worse following the conclusion of the closely watched event.
"I think people are always concerned about the banking sector and instability ... There will be a correction in the market. I mean, we've seen there's still a lot of bad assets that need to be written off in many banks, including European banks. And that will happen over time," Weber said.
"I think China will engineer a transformation of the financial system, and a slow opening up," he added.