CIMB continues to build its Asia research capability as it strives to become a top-10 regional broker. The Malaysian bank already has a strong on-the-ground presence across the key Asean markets and four recent Hong Kong hires are part of its plan to build a full research platform to take on the global banks.
Before buying some of Royal Bank of Scotland’s Asian equities businesses last year, CIMB covered stocks in Indonesia, Malaysia, Singapore and Thailand, with an outpost in Hong Kong. Since the $140 million deal in April, the bank now also has a serious presence in Hong Kong and China, has opened in India and Korea, and has plans to build a business in Taiwan after recently acquiring a licence and re-hiring the old RBS staff.
It also intends to open in India before the end of the year and already has the biggest research team in Australia through its acquisition of the old BZW business from RBS.
CIMB’s goal is to tie these businesses into a pan-Asian coverage model. New hire Jason Todd will play a big part in this effort as head of regional strategy, joining from Religare Capital Markets in Hong Kong. His role will be to use the bank’s research in each market as the basis for putting together a strong regional view.
“There’s a lack of good pan-Asia research, but sectors such as banks and communications really fit into the regional model,” says Jim McCafferty, co-head of equity research at CIMB. “The average fund manager sitting in Boston looks at South Korean and Thai banks in the same basket.”
However, pulling together regional research can be difficult without a strong presence on the ground, according to McCafferty, who worked at RBS before the CIMB acquisition and understands the challenges of relying on consensus forecasts or local joint-venture partners.
The bank is already covering 800 stocks in the region and aims to increase that to 1,000.
Two of the recent hires will directly help in that effort. Jimmy Wong joins as China oil and gas analyst, while Hans Fan will join the China and Asia financials team. During his nine years in the industry, Wong has had stints at J.P. Morgan, UBS and Citi. Fan previously worked at Standard Chartered, with three years serving mainland clients in corporate banking and two years in equity research covering China.
The fourth hire is Rohit Sharma, who joins as a quantitative analyst from ING Investment Management. With research on 800 stocks in nine markets from almost 100 analysts, Sharma will have plenty of data to work with.
CIMB’s ambition to build its equities business comes straight from the top. Chief executive Nazir Razak, a former equities salesman, takes a strong interest in the business and keeps McCafferty and his team on their toes.
“CIMB cares a lot about equities,” he says. “It is pragmatic, focusing on costs rather than headcount, and has always been profitable. It keeps its shareholders very happy.”
If that sounds like the antithesis of life at RBS, McCafferty would probably not disagree. Even so, building a top-tier equities platform is a tough ask. CIMB got the RBS businesses at a decent price and enjoys the support of a strong home market, but the competition is still fierce despite the woes of some of its international competitors.
The leading regional brokers are mostly the bulge-bracket US and European banks, plus CLSA, Macquarie and Nomura. CIMB would be the first Asean name to get a seat at the top table, where the step-up in business is considerable, but it remains to be seen if it can make the transition. Plenty have tried before, but CIMB is hoping that its roots in Asean will help it to stand out from the crowd.
McCafferty says the bank will make a few more hires and should be 80% to 90% staffed by the end of the summer.