CIMB Group and RHB Capital have reshuffled their top management following the collapse of their three-way merger with Malaysia Building Society (MBSB).
With both Malaysian banks struggling to articulate a new strategy in the wake of the merger failure and earnings under pressure as credit growth slows across Malaysia and Indonesia, RHB on Wednesday announced the resignation of group managing director Kellee Kam.
That follows news on February 6 that Lee Kok Kwan, CIMB's chief executive officer for corporate banking, treasury and markets, would step down to become an adviser to the group CEO but will also become a member of the board. Kenny Kim, chief financial officer and CEO of group strategy, also stepped down to become an adviser.
Lee Kok Kwan and Kenny Kim have worked for many years along side the former CEO Nazir Razak who stepped back after 15 years to become chairman last year. One person familiar with the matter said that it was understood internally when Nazir moved Kwan and Kim would likely move on too.
In addition, CIMB said Arwin Rasyid would resign as head of its Indonesian unit CIMB Niaga. CIMB Niaga said on Wednesday that its 2014 net profit fell 45% to IDR3.2 trillion ($250 million), due mainly to higher provisioning for loans to coal and coal-related sectors.
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’s management reshuffle is part of a wider revamp of the bank as its focus switches from loan growth to cutting costs. CIMB said it is looking to reduce its Asia-Pacific investment banking and equities operating costs by 30% this year.
As part of this clampdown, CIMB said on Monday that it will be closing its offices in Sydney and Melbourne.
“We have taken a long hard look at our Asia-Pacific investment banking business. The realities of today’s capital markets and the absence of sufficient flows have directly contributed to this decision,” CIMB’s acting CEO, Zafrul Abdul Aziz, said in a statement.
CIMB cut most of its 103 Australian staff who will be offered redundancies, some redeployment opportunities and outplacement support.
“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’s Kim.
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.