CIMB's Nazir move sends shockwave through Malaysia

Nazir Razak will step down as CEO on September 1 but disruption is likely to be short-lived.
Nazir Razak (left)
Nazir Razak (left)

Nazir Razak’s move from chief executive of CIMB to chairman after 15 years sent shockwaves through the Malaysian market on Thursday but analysts expect disruption to be short-lived.

A replacement is expected before September 1 – when Nazir steps down – and speculation is rife in the Southeast Asian country as to who will fill his shoes.

“All of us were taken by surprise. The first concern is whether there would be any change or disruption to the company’s current plans but Nazir did say that he is going to oversee most of the operations anyway, not the day-to-day things but the overall strategy of the group,” a person close to the situation told FinanceAsia.

Following news of the move, announced on Thursday, analysts appear torn between the successor being an external or internal candidate, although the likelihood of an external candidate is slimmer.

According to people familiar with the matter, the top three internal potentials are Tengku Zafrul Tengku Abdul Aziz, former Maybank Investment Bank CEO who joined CIMB Investment Bank as CEO in January; Renzo Christopher Viegas, CEO of CIMB Group’s consumer banking arm or Kok Kuan Lee, deputy CEO for the bank’s group treasury and investment arm.

“We are just curious to know who is coming on board as a replacement,” said a Kuala Lumpur-based analyst who declined to be named.

The analyst also expects the decision to be made by September 1, when Nazir becomes chairman. He is also set to join his brother, Malaysian Prime Minister Najib Razak, as a board member of Khazanah, the country’s largest sovereign wealth fund.

CIMB Bank said in a statement that a new group CEO would be announced once regulatory approvals had been obtained.

At the age of 48, Nazir will be the youngest chairman of a leading financial institution in the region. He will continue to serve as president commissioner of CIMB Group’s Indonesian subsidiary CIMB Niaga, deputy chairman of CIMB Bank and will be nominated chairman of CIMB Investment Bank.

Business as usual

Although the announcement came as a surprise to many on Thursday, analysts are comforted by the fact that Nazir will remain an influential figure at CIMB.

In a note to staff, Nazir said that the leadership transition was a move to ensure there was stronger oversight and better balance of roles between the chairman, the board, the CEO and management.  He also stressed he is not leaving the group and had every intention of continuing with the firm.

“It’ll be a bit of a change obviously because there is a transition taking place but he’s still with the bank and still holds a strategic role, which should keep things going on a continued basis,” a separate analyst told FinanceAsia. “This change will bring fresh ideas to the company ... so it’s viewed positively.”

Nazir replaces the long-serving Mohammed Nor Yusof, 66, who retires as chairman of the group. Yusof will leave the board to join the group’s International Advisory Panel (IAP), according to a statement from CIMB on Thursday.

Yusof was the CEO of Bank of Commerce — one of the key banks that made up the cornerstone of what is known today as the CIMB Group — from 1986 to 2000 and chairman of CIMB Group since July 2006.

Nazir is credited with transforming CIMB over the past decade from a small investment bank in Kuala Lumpur to one with extensive commercial and retail franchise across the Association of Southeast Asian Nations, one of the world’s fastest growing economic blocs.

Most recently under Nazir’s leadership, CIMB — also Asia’s fifth-largest bank by assets — boosted its regional operations and expanded its investment banking capabilities by acquiring parts of Royal Bank of Scotland’s Asia operations ex-Japan, including its regional equities business. The purchase was completed in 2013.

According to Dealogic data, CIMB is the best revenue-generating investment bank in Malaysia year-to-date with a market share of 16.3%, followed by RHB Capital and Maybank with market shares of 9.5% and 8.7% respectively. CIMB has maintained this top position for the past decade.

 

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