More than 15 months after CIMB agreed to buy part of Royal Bank of Scotland’s investment banking and brokerage business in Asia-Pacific, all of the RBS assets have finally been put into operation under its new owner.
The reason it has taken so long is that RBS retained its brokerage licences in some markets, which meant that the Malaysian bank had to apply for its own. In March this year it started its brokerage and corporate finance business in South Korea after winning a licence there and in April it launched a full suite of brokerage and investment banking services in India.
On Friday last week, it was finally time for the bank to launch its institutional brokerage business in Taiwan after receiving the okay from the local regulators. It is now able to offer its institutional clients direct execution of stocks listed either on the Taiwan Stock Exchange or the over-the-counter GreTai Securities Market. On top of that, it is providing research coverage of 68 Taiwan-listed stocks.
At present, CIMB has 32 people on the ground, including seven writing analysts.
While it didn’t acquire any hard assets or licences from RBS in Taiwan, it did take over the local staff and the clients.
It is the first Malaysian bank to operate a brokerage business in Taiwan and in light of the increasing links between Taiwan and Southeast Asia, CIMB’s strong position in the Asean region, where it ranks as the fifth largest universal bank in terms of assets, was viewed as a positive by the regulators when reviewing the application, said Peter Irvine, a former RBS banker who is now deputy head of institutional and retail equities at CIMB.
The addition of Taiwan means that CIMB now has a brokerage licence in nine countries in Asia Pacific. This should make a difference particularly for institutional clients that use programme or basket trading and for clients focusing on Greater China, for which the lack of direct execution and research on Taiwan stocks have been a noticeable gap, Irvine said.
In total, CIMB is now providing equity research on roughly 1,100 stocks in Asia Pacific, and it will continue to expand that coverage for the next few months. By the end of the year, it should cover between 1,100 and 1,200 stocks, Irvine said. This means it will have one of the biggest research footprints among all the banks in the region.
The only noticeable gap that remains is the Philippines, which is the only Asean country where CIMB still doesn’t have a presence on the ground. It was on its way to plug that when it agreed to buy a controlling stake in Bank of Commerce from San Miguel Corp in May last year. However, last month the two parties decided to cancel the deal after failing to reach an agreement on new terms.
CIMB’s CEO, Nazir Razak, told FinanceAsia in early June that he would be looking for other M&A opportunities in the Philippines if the Bank of Commerce acquisition didn’t go through. He also noted that outside the Philippines, the CIMB platform feels quite complete.
By getting the last piece of the RBS acquisition up and running, the management will be able to focus less on the practical issues and more on how to extract maximum value from the enlarged business.
“During these past 18 months, we have had to be quite internally focused, now it is time to focus externally on our clients again,” Irvine said.
