CIMB cuts 40 jobs in Asia

The layoffs were mostly in the Royal Bank of Scotland equities business CIMB bought in 2012 and are part of a broader cost-cutting exercise.

CIMB Group made 40 people redundant in Asia on Thursday as part of a wider cost-cutting exercise.

The redundancies are mostly in equities trading and are based in Hong Kong, Taiwan, India, and South Korea. A few of the positions eliminated were in investment banking advisory and back-office support.

The bulk of the layoffs were in the Royal Bank of Scotland's Asian equities business that CIMB acquired in 2012. 

The 40 people are a small percentage, low single digits, of CIMB’s overall investment banking advisory and trading business in Asia. One person familiar with the cuts described it as “business as usual” within the broader group.

"The realities of today's capital markets require us to recalibrate and [to] re-look at our operating environment and cost structures. In any case, our Asia IB platform remains intact and we continue to provide best-in-class services to our clients across the region," Zafrul Aziz, group chief executive of CIMB, said in an emailed statement. 

The job cuts are part of a wider revamp at the Kuala Lumpur-headquartered bank as its focus switches from loan growth to reducing costs. CIMB reports 2014 earnings results on Friday.

CIMB said on February 6 that it is looking to lower its Asia-Pacific investment banking and equities operating costs by 30% this year.

The latest job cuts are in addition to its more strategic decision, announced on February 9, to close its offices in Sydney and Melbourne and to let go of most of its 103 Australian staff.

CIMB is not alone in cutting back in equities.

Standard Chartered shuttered its loss-making global equities businesses in January. The UK-based emerging markets bank closed its global institutional cash equities, equity research and equity capital markets businesses, resulting in 200 job cuts, mostly in Hong Kong, Singapore, Korea, India and Indonesia.

On a much smaller scale CLSA also trimmed headcount in equities earlier this year.

Tough times

Loan growth is spluttering in Malaysia, partly due to the recent sharp fall in the price of crude oil, a key Malaysian export. Malaysian banks are also facing a massive liquidity squeeze resulting in net interest margin compression.

CIMB has also suffered from rising bad loans in Indonesia.  

Deteriorating asset quality in its Indonesian loan book contributed to CIMB’s sharp share price fall last year, which in turn made its all-share merger with RHB and MBSB untenable. CIMB is trading at a depressed 2015 forecast price-to-book value of just 1.2 times.

CIMB has had to reassess its strategy after the collapse of its three-way merger with RHB and Malaysia Building Society (MBSB).

“2015 is going to be tough,” Harsh Wardhan Modi, an analyst at JP Morgan, said in a January 23 note to investors after discussing the banking environment in Malaysia with CIMB.

 

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