CIMB out to challenge global rivals

CIMB Group, Malaysia's second-biggest bank by assets, is challenging its
bigger rivals and trying to make money in Asian equities despite the
moribund markets that have led to job losses and some groups closing
businesses.

CIMB is the only Asian bank outside Japan pushing
to become a leading pan-Asian investment bank as established global and
Japanese players struggle to make money, especially in equities.

In Asia, only the top three banks in both equities trading and listing
new companies make significant profits from these activities, according
to consultants and some bankers.

However, Matthew Kirkby, the
Hong Kong-based co-head of investment banking at CIMB, told the
Financial Times that the Malaysian group's lower cost base means it can
be "sustainably profitable" with a position in the top 10 in revenue
terms in equities.





Asked about the cost pressures that have led to hundreds of jobs being
lost at other banks in Hong Kong alone over the past year, Kirkby said:
"Part of that is the cost base you're running. We have quite a lot of
our people in lower-cost locations already."

CIMB has recently
won approval for new licences in India and South Korea, where it bought
businesses from Royal Bank of Scotland (RBS) but where the British bank
wanted to keep its licences. It also has an application pending for
Taiwan.

CIMB's US$60 million (RM183 million) deal last year to
take over most of RBS' operations in the region and its pledge to invest
another US$220 million (RM671 million) in that business contrasts with
the more limited ambitions of rivals such as Singapore's DBS, which are
more focused on commercial banking and trade than traditional investment
banking and equities.

Elsewhere in Asia, Mirae Asset
Securities, part of the South Korean asset management group, this month
cut half its Hong Kong equities dealing and research staff and said it
would rethink the business because of "the current decline in global
brokerage market activity". That follows complete exits from Hong
Kong-based broader Asia businesses last year by Samsung Securities and
Daiwa Securities.

In contrast, CIMB has been hiring research
staff - at a time when other groups are letting employees go, or even
shuttering businesses - and now has 100 people covering 1,000 stocks in
nine countries.

Senior bankers at global banks reckon that if
any local bank can establish a strong regional position, it will be
CIMB. However, not all analysts are convinced.

Kevin Kwek at
Bernstein Research in Singapore said absorbing the RBS franchise has
yet to produce the revenue growth the Malaysian bank had projected.

"CIMB's push to establish itself Asia-wide in this space is a vision
that will take a long time to see any consistency in results, with risks
of overextending itself, and taking up precious management time and
attention."

CIMB was 10th in the league table for equity
capital fund-raising in Asia last year, excluding Japan and mainland
China, says Dealogic, and top of the table for Southeast Asia.


However, that was mainly due to Malaysia's record year for listings with
some of the region's biggest deals, including the US$3 billion (RM9
billion) initial public offering by Felda Global Venture Holdings. CIMB
was involved in all of the biggest Malaysian deals.

The
country's financial markets have been quieter this year, partly because
of the upcoming general election, but banks are still directing
resources into Southeast Asia.

"Historically, if you didn't get
Hong Kong/China right in equities it almost didn't matter what you did
anywhere else. This market is still very important, but we have to make
sure we don't lose ground in our home markets. We see other global
institutions waking up to that (region)," Kirkby said. FT