BEIJING/SHANGHAI/ZURICH (Reuters) - UBS has put on leave a senior economist whose comments about pigs in China caused an outcry and prompted one Chinese firm to suspend all business with Switzerland’s largest bank.
UBS apologized on Thursday for any misunderstanding caused by Paul Donovan’s comments, which it said were about inflation and a rise in Chinese consumer prices due to higher pork prices.
“We confirm that we have asked Paul to take a leave of absence as we review this matter, to evaluate whether further steps need to be taken,” a UBS spokesman said on Friday.
Donovan’s comments, perceived by some as a racist slur, had further ramifications when Haitong International Securities, the Hong Kong unit of Chinese brokerage Haitong Securities Co, said it has suspended all collaboration with UBS.
No other Chinese brokerages and financial institutions have cut ties with UBS, but some in the Chinese financial community have rejected an apology from UBS.
“There is not a clear timetable on when to resume the collaboration, which is subject to the management’s decision,” Haitong International said in an email sent to Reuters.
Donovan, global chief economist of UBS’s wealth management business since 2016, said on Wednesday that consumer prices in China had risen mainly due to sickness among pigs.
“Does this matter? It matters if you are a Chinese pig. It matters if you like eating pork in China,” Donovan said in comments some interpreted as referring to people, not livestock.
African swine fever, a disease deadly to pigs, is ravaging herds across Asia. China has reported more than 120 outbreaks since it was first detected in the country in August.
Donovan did not respond to requests for comment.
The Securities Association of China, a self-regulatory body for the industry, said that its members should not quote Donovan’s research or invite him to events.
The association also urged UBS to strengthen compliance and take measures to eliminate any negative impact from the remarks.
The stakes are high for foreign companies like UBS looking to expand their presence in China as the world’s second-largest economy further opens up its financial sector.
In December last year, UBS became the first foreign bank in China to get official approval to acquire a controlling stake in its local securities joint venture.
The Swiss bank has said it was enhancing its “internal processes” to avoid any recurrence of such an incident and remains “fully committed to investing in China”.
Lin Yong, chief executive of Haitong International, announced the decision to freeze ties with UBS on his personal WeChat account, a Haitong employee told Reuters.
It was also revealed in an email circulated among Haitong International staff, a second Haitong employee said.
The Chinese Securities Association of Hong Kong (HKCSA), whose 124 member firms include offshore subsidiaries of Chinese brokerages and fund houses, said it was not aware if any other members were cutting ties with UBS.
Haitong International’s Lin is the president of the HKCSA, which demanded on Thursday that UBS dismiss Donovan and issue a formal apology from the board, while calling on companies and individuals to think carefully about doing business with UBS.
“Regrettably, this information (UBS’s apology) is not only insincere, but also arrogant, again hurting the feelings of Chinese people,” it said in an open letter to the UBS board.
Lin did not respond to requests for comment, while UBS declined to comment on Haitong International’s decision and referred to Thursday’s apology.
($1 = 7.8279 Hong Kong dollars)
Reporting by Samuel Shen, Xiangming Hou, Ryan Woo aznd Oliver Hirt; Writing by Yawen Chen and Michael Shields; Additional Reporting by Cheng Leng, Stella Qiu and Jennifer Hughes; Editing by Himani Sarkar, Robert Birsel and Alexander Smith