RBS closing down some units in Asia

HONG KONG: Royal Bank of Scotland Plc (RBS) is closing its equity capital market (ECM) and corporate finance units in South Korea and cash equities businesses in Indonesia, South Korea and Singapore in the latest move to cut the size of its struggling investment bank.

The decision sheds light on the British lender’s recent agreement with CIMB Group Holdings Bhd for the sale of Asian assets, signalling that Malaysia’s second-biggest bank is eyeing RBS’S Hong Kong, India and Australian businesses to boost its investment banking presence in Asia.

The plan is in line with chief executive Datuk Seri Nazir Razak’s ambitions to make CIMB a leading Asian financial services firm.

CIMB has in recent years significantly boosted its presence in SouthEast Asia through banking and brokerage assets acquisitions in Indonesia, Singapore and Thailand.

CIMB said earlier this month that it had entered into exclusive talks with RBS to acquire some of its AsiaPacific cash equities and investment banking businesses.

“The main idea behind the acquisition is for CIMB to secure a presence beyond Asean,” said Chris Eng, head of research at OSK Research. “The main markets that will benefit them from RBS are places they don’t have, such as Hong Kong, Australia and North-east Asia.”

An RBS spokeswoman said 70 employees would be impacted by the closure of the units and that it would work closely with CIMB to conclude the deal for the other Asian units.

“For commercial reasons, we have agreed with CIMB that the cash equities, ECM and corporate finance businesses in South Korea and cash equities in Indonesia and Singapore will not ultimately transfer as part of the sale,” RBS said. “We have therefore made the decision to initiate steps to wind down these businesses commencing today (yesterdasy).”

A significant chunk of RBS’ operations are in Hong Kong, Singapore, Australia and India. It has offices in 11 countries across the region, including China.

North Asia is a lucrative market for brokers as a recent study by Greenwich Associates showed that of the Asian equity commissions paid by institutions to brokers, about 42% originated with trades of Hong Kong and Chinese stocks, compared with 41% recorded in 2010.

South Korea is a distant second with a 14% share of Asian equity commission payments, followed closely by India at 13%. — Reuters