Malaysia's No.2 lender, CIMB Group Holdings Bhd
CIMB's acquisition comes as Southeast Asia's largest bank, DBS Group
This acquisition takes CIMB to the next level, CIMB's chief executive, Nazir Razak, told reporters. We will have seats in nine exchanges and partnerships in three others. Our research will cover approximately 1,093 Asia-Pacific based companies and we will see a big interest in global institutional investors relationships.
The deal covers the cash equities businesses in Australia, China, Hong Kong, India and Taiwan and includes the cash equities sales desks in the UK and United States. It also covers equity capital markets and mergers & acquisition businesses in Australia and China, Hong Kong, India, Indonesia, Malaysia, Singapore, Taiwan and Thailand. There were some small interests in Australia and China that were not included in the deal.
The deal follows a month of exclusive talks with the British lender. CIMB will pay RBS 431.8 million ringgit ($140.95 million) and then inject 417.6 million ringgit of capital into operating entities in Asia. In a separate statement, RBS said CIMB would pay about 75 million pounds ($119.83 million).
Nazir said the acquisition will be completed by November and is expected to contribute to CIMB's earnings next year.
CIMB also expects 350 to 400 staff from the struggling British lender to join the enlarged CIMB business. Nazir said CIMB had asked 94 RBS senior officials to join with 87 percent accepting the offer.
RBS earlier said 70 staff would be fired after it closes its equity capital market and corporate finance units in South Korea and cash equities business in Indonesia, Singapore and Korea.
As these assets were not on offer, analysts said this move would shed some light on where CIMB wanted to expand its footprint.
NORTH ASIA CHARM, KOREA SURPRISE
CIMB is clearly eyeing China, widely regarded as a lucrative market for brokers. A recent study by Greenwich Associates showed that of the Asian equity commissions paid by institutions to brokers, approximately 42 percent originated with trades of Hong Kong and Chinese stocks, compared with 41 percent recorded in 2010.
But the key surprise was South Korea. Nazir said CIMB will apply for a new stockbroking license and set up operations in South Korea, which according to Greenwich Associates, takes up 14 percent of Asian equity commission payments.
RBS' northern Asian business was a key draw for lenders in the region. The auction for the sale of RBS' Asian assets attracted interest from firms such as Bank of China Ltd <601988.SS> and Japan's Mizuho Financial Group Inc <8411.T>.
RBS has halved the size of its investment bank as part of a major retreat since its 2008 taxpayer bailout and has been forced by the British government and lower profitability across the industry to extend the retreat.
($1 = 3.0635 ringgit)
($1 = 0.6259 British pounds)
(Reporting By Yantoultra Ngui; Writing by Niluksi Koswanage; Editing by Matt Driskill)