CIMB Group group chief executive Tengku Datuk Seri Zafrul Aziz (left) and China Galaxy Securities Co Ltd deputy chairman and president Gu Weiguo at the signing ceremony to explore the strategic partnership at China Galaxy Securities headquarters, Beijing.
KUALA LUMPUR: CIMB Group Holdings Bhd, one of Asean’s largest universal banks, and China Galaxy Securities Co Ltd, one of the biggest Chinese securities companies, are discussing to set up a 50:50 joint-venture (JV) stockbroking business.
Malaysia’s second largest lender said in a statement that its wholly-owned subsidiary, CIMB Group Sdn Bhd (CIMBG), signed a heads of terms on Monday with China Galaxy International Financial Holdings Ltd (CGI), a unit of China Galaxy Securities to explore a potential strategic partnership in the cash equities business, comprising institutional and retail brokerage, equities research and associated securities businesses in the region.
They also intend to identify further areas of co-operation in the relevant markets where they operate.
CIMB said it would continue to offer investment banking and capital markets products and services to its clients while the JV would operate the stockbroking business, providing an extensive equity distribution platform and research services to complement and support CIMB’s fully-owned investment banking business and capital markets businesses.
“Through this exercise, CIMB’s stockbroking business will effectively be repositioned as a pure play broker with the client base of a universal bank,” it saod.
The proposed partnership is subject to the negotiation and entering into of definitive agreements.
“The JV sees two leaders in their respective markets combine their expertise and reach to scale up and take the business to the next level. Furthermore, through the JV, the group will be in an advantageous position to capitalise on China-outbound M&As (mergers and acquisitions) and other capital market activities through enhanced synergies and cross-selling opportunities, as well as benefit from China’s focus on infrastructure development projects, such as the ‘One Belt One Road’ project, which will facilitate further growth, consumption and capital flows into the region,” the financial services group said.
CIMB group chief executive Tengku Datuk Seri Zafrul Aziz said the model of the pure play JV broker working strategically with the bank was a hybrid model that paved the way for both parties to create stronger capabilities and depth to get ahead of the curve.
“We are also confident that with the China Galaxy Securities Group as a partner in this JV, CIMB will also be better placed to capture the growing trade and investment flows with China,” he said.
* See also CIMB's Thai subsidiary posts lower profit
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