Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on May 24, 2018

KUALA LUMPUR: Kenanga Investment Bank Bhd (Kenanga IB) wants to expand its remisier base through the proposed acquisition of Inter-Pacific Securities Sdn Bhd (Interpac Securities), said its managing director Datuk Chay Wai Leong.

“We want to expand our remisier base. We want to be a strong No 1,” Chay told reporters after Kenanga IB’s annual general meeting yesterday. “With the proposed acquisition, we’ll be far ahead,” he said.

Kenanga IB is currently the largest retail stockbroker in the country, with a remisier base of about 1,000 through 32 branches nationwide.

While the proposed acquisition of Interpac Securities will come with its five branches across Kuala Lumpur, Penang and Johor Baru, the focus is on the remisier base as Interpac Securities has more than 200 remisiers, Chay said.

On Monday, Kenanga IB announced it had obtained approval from Bank Negara Malaysia to start talks with Interpac Securities, part of Berjaya Corp Bhd, to buy its stockbroking business.

This was on the back of intense competition in the industry with more investors opting for online trading, doing away with commission for brokers. Margin financing activities are also facing growing competition from conventional banks charging competitive rates even as they fight for market share within the banking industry.

In an intense environment, more merger and acquisition activities are seen as it becomes a contest for the survival of the fittest, with the non-bank-backed brokerage houses being among the first to be impacted.

Recall that some of these were seen in 2014 when Affin Investment Bank Bhd enlarged its reach by taking over Hwang-DBS Investment Bank. The deal saw Affin immediately growing its distribution network by almost four times to 25 branches and 770 remisiers from only six branches and 218 remisiers prior to the takeover.

There was also the acquisition of OSK Investment Bank by RHB Group, while Kenanga IB also acquired ECM Libra Investment Bank Bhd in 2012.

Among the non-bank-backed houses in the industry are JF Apex, Interpac, M&A Securities, TA Securities, Mercury Securities, Jupiter Securities, Melaka Securities and PM Securities. The bank-backed brokerages are CIMB Investment Bank Bhd, Maybank Investment Bank Bhd, AmInvestment Bank Bhd, Affin Investment Bank and RHB Investment Bank Bhd.

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