CIMB continues its Asian expansion with the start of an investment banking and brokerage business in India, after winning a licence from the local securities regulator.
The Malaysian bank opened brokerage and corporate advisory in Korea three weeks ago and its regional business now includes every Asean market except Laos and the Philippines, plus Australia, China, Hong Kong and Sri Lanka.
“We are delighted to add India to our footprint, which now comprises all major Asia-Pacific markets except Taiwan," said Nazir Razak, CIMB’s group chief executive, in a statement released yesterday. “India is a mega economy and an essential market for any major investment bank.”
Devesh Kumar will lead the 60-strong team in India, which will offer investment banking, equities brokerage and research to both domestic and international clients.
The team will cover 110 Indian stocks, representing 72% of the domestic market capitalisation, and aims to increase that to 150 stocks or 85% of market cap during the third quarter of this year.
A new office in Taipei is next on the agenda for CIMB’s ambitious expansion. “Taiwan is expected to come on board next month, and then we will be definitively the biggest Asia Pacific-based investment bank,” said Razak, whose brother Najib Razak, the prime minister, is fighting to win another term in a tight election scheduled for May 5.
Since buying Royal Bank of Scotland’s Asia-Pacific investment banking and cash equities operations last year, Razak has sustained a commitment to investing in CIMB’s regional presence.
Rivals at the global banks are unsurprisingly sceptical about CIMB’s ability to turn this investment into profits, but Razak is seizing on what he sees as a gap in the market for a pan-regional firm with plenty of boots on the ground and a long-term commitment — a commitment that European banks in particular have retreated from as they struggle to cope with the post-crisis banking market.
However, there is still plenty of competition. While most European banks are still restructuring, the US banks are re-emerging with stronger balance sheets and have the advantage of an improving home market — even Citi surprised with strong results yesterday, including Asia securities and banking profits that rose 471% compared to the last quarter of 2012.
