Forming the largest investment banking franchise based in Asia Pacific (ex-Japan)
Kuala Lumpur: CIMB Investment Bank (CIMB) today announced the acquisition of most of the Asia Pacific cash equities and associated investment banking businesses of the Royal Bank of Scotland (RBS). The GBP173.9 million (RM849.4 million) deal will see CIMB emerging as the largest investment banking franchise based in Asia Pacific (ex-Japan).
“This is an excellent opportunity to complete the build-up of our capabilities in Asia Pacific markets, and to do it quicker and less expensively than if we grew organically,” said Dato’ Sri Nazir Razak, Group Chief Executive, CIMB Group.
“Top tier international investment banking is an important extension to CIMB Group’s ASEAN universal banking platform. CIMB’s expanded investment banking franchise will enable us to assist investors and businesses who want to move in and out of ASEAN or across Asia Pacific as a whole," added Nazir.
Since the acquisition of GK Goh Securities in 2005, CIMB’s investment banking franchise, including its securities operations, has been the market leader in ASEAN. It has full presence in key ASEAN markets and representation in New York, London, Shanghai, Mumbai, Hong Kong, Colombo and Bahrain. It also operates via partnerships in Taiwan, Korea and Australia. The addition of the RBS units will mean that, upon regulatory approvals, CIMB will have new on-shore presence in Taiwan and Australia, as well substantially enlarged operations in Hong Kong, India and China. As RBS has decided not to sell its Korean entities, CIMB will seek to set up new operations in Korea soon. This deal decisively transforms CIMB into an Asia Pacific investment bank.
“This acquisition takes CIMB to the next level. We will have seats on nine exchanges and partnerships in three others. Our research will cover approximately 1,093 Asia Pacific-based companies and we will see a big increase in global institutional investor relationships,” said Nazir. “While we are still finalizing the full staff complement of the merged businesses, we are expecting between 350-400 RBS staff to join us.”
Leading the move to CIMB is Matthew Kirkby, Head of Global Banking Asia Pacific for RBS. “We look forward to joining CIMB with a sense of enthusiasm and optimism,” he said.
“CIMB’s Group Chief Executive has personally spoken to all of us and shared the CIMB story – both the fantastic track record in ASEAN capital markets and future plans in Asia Pacific investment banking. This is a complementary exercise with a compelling set of potential business synergies," said Kirkby.
The deal will see CIMB paying RBS a gross amount of approximately GBP88.4 million (RM431.8 million) and injecting a further GBP85.5 million (RM417.6 million) of new capital into various operating entities. CIMB will only acquire legal entities in Australia; in other jurisdictions, the relevant businesses of RBS including selected staff, assets and client mandates, will be migrated to existing or new CIMB subsidiary companies. In addition, RBS will pay CIMB a sum of approximately GBP13.8 million (RM67.4 million) which will be used to defray the first year running costs of the business. The effective Price to NTA ratio of the transaction is about 0.98 times.
Acknowledging the possible risks of the transaction, Nazir added: “We do not underestimate the new and unique management challenges that this acquisition brings to us. But, we can point to our proven and exceptional record in M&A and our integration of banking and investment banking across ASEAN. At the heart of our success so far is our ability to manage and leverage the diversity of our businesses and people."
"I have said before that this won't be the Asian Century without Asian companies rising to the occasion. CIMB is not only stepping up, but also placing itself in a superb position to assist other companies in Asia to move across borders," he said.