Liu put in charge of Citic's brokerage business

Liu Jun is replacing Xu Gang at the helm of Citic Securities's brokerage business as it looks to close the gap with its main rival Huatai Securities, sources familiar with the matter said on Wednesday.

Liu will remain head of the diversified Chinese financial group's asset management division, a role he has held since late 2013. He will soon also join the executive committee of Citic Securities, which currently comprises eight people, including chairman Wang Dongming and president Cheng Boming, the sources said.

“This is definitely a big promotion for him, as he’s going to join the committee and concurrently lead the company’s two most important departments,” one Beijing-based Citic source told FinanceAsia.

According to Citic’s 2014 annual report, brokerage and asset management businesses contributed about 60% of the company’s revenue last year.

Xu, who oversaw the brokerage business at Citic, has been assigned to take charge of the relatively underdeveloped back-office and IT services. He will continue to manage the broker’s award-winning research team.

The senior personnel changes come after Citic, much like other Chinese brokerage firms, experienced substantial drops in net earnings and revenue in July as the domestic stock market tanked and a regulatory crackdown on margin financing crimped business.

Citic’s revenue fell nearly 20% from June to Rmb3.6 billion ($560 million), while its profit dipped by 37% month-to-month to Rmb1.5 billion ($230 million).

Fierce competition

Citic's brokerage business is also facing fierce competition from local rivals, in particular Huatai Securities.

Huatai, the country’s third-largest brokerage by revenue, has been lowering commission fees and strengthening its position in online broking to gain market share. Among China’s listed securities houses it had the biggest share of trading volumes last year, knocking Citic off its leading position for the first time in years.

According to financial data provider Wind Information, Huatai so far this year is still beating Citic in terms of fund and share trading volumes, with a market share of 8.6% compared with Citic’s 6.9%.

A capital markets veteran, Liu joined Citic Securities from Citic Bank in the mid-1990s when the brokerage firm was established. During his twenty-year tenure, Liu has held a variety of roles at different departments, including that of brokerage, both in local branches, such as in Hangzhou and Dalian, and at the group's headquarters in Beijing.

Under his brief leadership Citic’s asset management business posted about Rmb6.1 billion ($950 million) in revenue last year, up 266% on 2013.

“He’s quite good at managing people and is fair in meting out rewards or punishments,” a Beijing-based portfolio manager at Citic who used to work under Liu told FinanceAsia.

“He could be aggressive. But he brings in good results,” the portfolio manager said.