For fund managers, yesterday marked the first day they were fully aware of Macquarie Bank's push into Asian broking. The old ING operation it bought, sent out its first emails with research rebranded in the red colours of Macquarie. The acquisition of ING's broking business was completed on Friday.
Macquarie bought an operation of 400 people in one of the most competitive broking markets in the world. Asked why it chose to buy the ING platform, Nicholas Moore, head of Macquarie's investment banking group says: "We've been growing our business in Asia gradually. We'd established corporate finance operations in Korea, Malaysia, Singapore and Hong Kong, and these were all running profitably.
"We had tried to grow a broking business in Hong Kong, but could not get the scale. However, we'd integrated corporate finance and equity into the number one platform in Australia and we had a desire to grow in Asia and apply our experiences from Australia."
Moore says Macquarie was approached about buying ING's business late last year and was initially cautious. "We knew Asian broking is a difficult market to make money in," he says. "We warmed to the idea because of the people we met in the ING business. We also got good feedback from our clients."
There is also a logic, he says, to integrating the Asian and Australian equity research and sales functions, since many fund managers want to look at the Asia-Pacific footprint as a whole.
One fallout from the acquisition was a previous agreement with CLSA. Macquarie had earlier signed an alliance with CLSA to market its Australian research to its Asian clients and for CLSA to market its Asian research to Macquarie's Australian client list. Thanks to acquiring its own Asian broking platform, the CLSA alliance became superfluous and has since been terminated.
Moore says integration is already well underway. ING equity sales staff in London have already relocated to Macquarie's offices in the British capital. In Hong Kong, Macquarie's warrants and corporate finance teams have been co-located with the old ING platform.
Macquarie's global head of sales, Basil McIlhagga has moved to Hong Kong to be head of Macquarie Securities Asia, and the head of research, David Rickards, is also being moved from Sydney to Hong Kong. A new head of corporate finance, Andrew Low is also being moved from Australia.
"There will be a quite a few Macquarie people, which should help the cultural integration," says Moore. He says Macquarie has effectively been in control since March and 40 or so hires have already been made. With bonuses paid in April, he admits that five or six people left, "who we would have preferred not to lose", but adds that those who intended to leave already have and the firm is now in a building phase. He predicts another 40 hires.
Moore says building up the ECM business is vital, and will be done in a niche way, based on areas of Macquarie expertise - such as infrastructure where it is a world leader. He also says more resources will be put in to the China broking space.
Given that the old ING platform probably ranked 9th or 10th, it is reasonable to ask Moore what Macquarie's ideal ranking would be. Alastair Barr at ABN AMRO, for example, told FinanceAsia that his goal was to get into the top five, when he arrived from Australia to rebuild that franchise 18 months ago. However, Moore says there is no magic number in their business plan: "We just want to hit a level where we're profitable on a sustainable basis."
He notes: "Asia is challenging due to the competitive forces, and we are going into this with our eyes open knowing it will be very tough. But the whole world can see the potential of Asia, and that includes Macquarie."
