Business

Saturday February 18, 2012

RBS assets acquisition plan won’t affect CIMB’s regional expansion

By DALJIT DHESI
daljit@thestar.com.my


PETALING JAYA: CIMB Group’s regional plan to be Asean centric will not be significantly impacted should it acquire some of the much-talked-about Asian assets of the Royal Bank of Scotland (RBS), analysts said.

A banking analyst with MIDF Research told StarBizWeek that the brokerage was neutral on CIMB’s plan even if it did eventually acquire some of RBS assets as highlighted in recent media reports.

“CIMB has its eyes set on being an Asean banking powerhouse and at the moment is focusing on its regional plans, namely to have operations in the Phillipines and Laos. If this materialises, it will have presence in the whole of Asean.

“Besides this, it also has presence in China and Hong Kong in corporate and investment banking and if CIMB were to acquire RBS assets in these countries, there will be duplication in operations,’’ he added. The only practical reason for CIMB to pursue RBS assets would be the acquisition price, which was below its par value, he said.

The Australian on Thursday reported that the CIMB Group was confirmed to be a buyer of Britain-based RBS Australia equity business. The group had won the bid against China International Capital Corp to acquire the Australian equity operations for US$50mil (RM153mil).

CIMB is now in talks with brewer San Miguel Corp for a stake in the Philippines’ Bank of Commerce and hope to conclude discussions in the first quarter this year. At the same time, it is also applying for a licence in Laos.

A banking analyst with a foreign investment bank said he was neutral on CIMB’s acquisition of RBS’ regional assets unless there were areas that could add value to the group’s business, adding that RBS’ equities and merger and acquisition (M&A) businesses were in Hong Kong, India and China and that CIMB already had some presence in these countries.

Although he had doubts whether RBS would be a right fit for CIMB, as the latter’s key focus was on Asean while the former had an Asian presence, he felt that the right pricing would be crucial to the acquisition.

RBS Group is currently looking for a buyer for its cash equities, corporate broking, equity capital markets and M&A businesses in the region but has not officially announced anything so far.

Maybank IB analyst Desmond Ch’ng said in a recent report that at this stage, he felt CIMB could just as well build up its own equity/advisory capabilities without having to acquire RBS outfits.

This was particularly since the value of such businesses was intrinsically tied to the capabilities and talent of key individuals, rather than the franchise, he said.

This, Ch’ng added, was especially so since the group had a presence in Hong Kong through CIMB Securities Hong Kong.

However, Affin Investment banking analyst Eileen Tan was quoted as saying that the purchase of RBS assets could be a platform for CIMB to penetrate further into the Asian market.

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