Razak steals a march in Asia
CIMB’s acquisition of RBS’s Asia-Pacific investment banking business looks set to propel the Malaysian bank into a leading position in the region. But the full benefits, as CIMB CEO Nazir Razak recognizes, will materialize only if regional integration comes to fruition.
The diverging fortunes of financial markets in Asia and Europe were starkly illustrated in May. Eurozone markets continued to fragment but in southeast Asia integration came to the fore. The region’s finance ministers doubled resources held by the Chiang Mai Initiative Multilateralization, a 12-year-old monetary framework, to $240 billion, in a bid to increase Asia’s financial safety net. Policymakers also rubber-stamped moves to cross-list securities between regional exchanges, and China took small steps towards liberalizing its capital account.
The symbolism of these developments is seductive for Asia bulls. Financial cooperation measures are gathering pace – albeit from a low base – as Asian leaders promote an intra-regional growth dynamic, a grand and timely endeavour given the eurozone storm.
|CIMB tries to build a pan-Asian presence
|Complementary merger-broking, ECM & CF across Apac
Exemplifying this shift in the centre of financial gravity, Malaysia’s CIMB struck a transformational deal in March with a memorandum of understanding to acquire Royal Bank of Scotland’s Asia-Pacific cash equities and investment banking business for a net £75 million ($118 million). Although the sums involved are modest, the deal elevates Southeast Asia Inc’s vision, demonstrating that domestic banks are well capitalized and sufficiently ambitious to prey on fallen angels from developed markets.