CIMB plans to slash unit’s costs by 30%

KUALA LUMPUR: CIMB Group Holdings Bhd, Malaysia’s second-largest bank by assets, plans to cut investment-banking costs by about 30% this year in anticipation of slower growth.

The company will reassess its investment-banking presence in the Asia-Pacific region after acquiring some Royal Bank of Scotland Group Plc operations in 2012, according to an e-mailed statement.

After scrapping a planned merger that would have created Malaysia’s biggest banking group last month, the lender said it would only seek minor takeovers to complete its footprint in Southeast Asia.

Tougher regulations and higher capital requirements are putting pressure on financial firms to reduce costs, with Standard Chartered Plc, CLSA Ltd and Nomura Holdings Inc among firms that are cutting jobs in Asia.

“We have grown aggressively over the years and have a fantastic platform and brand,” Tengku Zafrul Aziz, acting group chief executive officer, said in the statement on Friday. “We can no longer depend on a high-growth operating environment.”

CIMB has more than 40,000 employees in 18 countries, according to the statement.

The company bought most of RBS’s Asia-Pacific cash equities and investment banking units in 2012 for £88.4 million ($136 million).

It dropped a three-way merger plan with RHB Capital Bhd and Malaysia Building Society Bhd last month, citing economic conditions.

The lender is targeting a cost-to-income ratio of less than 50% at the end of 2018 and for consumer banking to contribute about 60% of income. It aims to achieve a return on equity of 15% by then, according to the statement.

CIMB also announced several management changes. Tengku Zafrul will become CEO of wholesale banking, while Shahnaz Jamal, deputy group chief financial officer, will be promoted to CFO effective March 1. Arwin Rasyid, the chief of its Indonesian unit, will probably step down in April.

“This is just phase one of a long list of cost-management measures the firm is undertaking,” Tengku Zafrul said. “The strategic review has been about identifying areas where we are but should not be, areas where we need to be better and areas where we are already strong.”

Standard Chartered said Jan 8 that it was shutting its unprofitable institutional equities business globally, eliminating 200 jobs, mostly in Asia. Nomura cut about 12 Asia equity jobs in Hong Kong, a person with knowledge of the matter said last month.