This article first appeared in The Edge Malaysia Weekly, on April 11 - 17, 2016.
There may be a changing of the guard at RHB Investment Bank Bhd (RHB IB) as the RHB banking group looks to derive more business from the region, sources say.
Industry sources say Mike Chan, the managing director of RHB IB since August 2013, will be moved to Singapore to help grow the group’s businesses there. It is not clear what position he will hold, but it is understood that the job scope may extend beyond investment banking.
RHB IB is the RHB group’s investment banking arm.
“There are still a lot of things to be ironed out, including obtaining regulatory approval, but the idea is that he will help grow RHB’s businesses — not just in investment banking — in Singapore. The underlying motive [behind the move] is for the group to do more regional business, using Singapore as a base,” says a source familiar with the matter.
Chan’s move to Singapore is pending regulatory approval, the source adds. Chan, when contacted, declined to comment.
Singapore is the RHB group’s biggest overseas market and it is no secret that the group has been wanting to grow its businesses there. It has commercial banking operations through RHB Bank Singapore and a brokerage, RHB Securities Singapore.
“I think Singapore is a gem that we haven’t really polished well,” RHB Capital Bhd’s group managing director and CEO Datuk Khairussaleh Ramli told The Edge in an interview two years ago. At the time, he was deputy MD.
He said he wanted to grow Singapore’s revenue contribution to the group to 10% by 2017 from about 5% at the time. This would be through a stronger focus on small to medium-sized enterprise and commercial banking, as well as corporate banking and syndication loans.
Back in 2014, RHB group outlined a three-year growth plan called Ignite 2017, in which it laid out some ambitious targets, including one to derive at least 30% of revenue from overseas by 2017. This target was set at a time when the group was expecting to acquire an Indonesian bank, PT Bank Mestika Dharma. However, the deal was subsequently aborted.
Last year, just 14.4% of its revenue came from overseas. “With 2017 coming, there’s pressure on them to step up overseas revenue,” remarks a banking analyst who tracks the group.
RHB Bank Singapore has seven branches, the most number of branches held by a Malaysian bank after Malayan Banking Bhd (Maybank), which has 22 branches. The group’s head of Singapore operation is Jason Wong Hon Lurn.
RHB Securities Singapore, which is wholly owned by RHB IB, is helmed by CEO Robert Angelo Hendro Santoso Huray.
Sources say it remains to be seen who will replace Chan if he makes the move to Singapore. But there has been strong speculation in the industry that RHB Securities Singapore’s Huray, said to be a charismatic individual in his late 30s, is a leading candidate.
“It’s one possibility but there are many permutations internally. It’s still very fluid,” a source tells The Edge.
An Indonesian, Huray is the son-in-law of Tan Sri Ong Leong Huat. Ong, through OSK Holdings Bhd, is a substantial shareholder in RHB Capital with a 10.13% stake. Huray is married to one of Ong’s three daughters.
These internal moves are being considered at a time when the RHB group is undertaking an internal restructuring that involves RHB Bank Bhd assuming parent company RHB Capital’s listing status. The exercise, first proposed about a year ago, is expected to be completed by the second quarter.
Just last Wednesday, RHB Capital unveiled details of the restructuring, which will, among other things, see it transferring its stakes in its subsidiaries to RHB Bank for RM3.41 billion cash. The exercise is expected to give the group better capital and tax efficiency for profit growth.
“[Chan’s potential move to Singapore] may not be directly related to this, but it’s always been RHB’s ambition to grow regionally and Singapore is seen as a key market,” another source says, pointing out that Singapore is one of the world’s leading financial centres. “The group wants to grow its treasury and asset management businesses in Singapore, apart from the other investment banking and commercial banking businesses.”
The group’s Singapore operation’s PBT fell to S$34 million in FY2015 from S$74 million a year before, according to data on RHB’s website. While RHB Bank Singapore’s PBT grew by 9.5% to S$46 million in FY2015, it was RHB Securities Singapore that dragged down the group’s overall performance in the republic with a pre-tax loss of S$12 million compared with a PBT of S$32 million in the year before.
Khairussaleh told analysts in February that the group’s growth strategy in Singapore this year is to invigorate key growth pillars — retail, business and corporate and investment banking — through enhanced cross-entity and cross-border collaboration.
A seasoned investment banker, Chan has over 24 years of experience in the financial services industry. He joined the RHB group from Maybank in May 2010, becoming head of corporate banking at RHB Bank. In addition to that role, he was the officer in charge of RHB IB prior to officially taking its helm in 2013.
He played an important role in the 2012 merger and subsequent integration of RHB Investment Bank and OSK Investment Bank, a move that gave the RHB group a regional presence.
Post-merger, RHB IB is now one of the key players in the Malaysian capital market. But as the outlook for capital markets remains soft, it will be a challenge for it to grow income.
RHB IB, nevertheless, beat bigger rivals to top Mergermarket’s league table of financial advisers for deals done out of Malaysia in the first quarter of this year, in terms of deal value.
According to Mergermarket, a deal tracking firm, RHB IB was the adviser on five deals valued at US$685 million that were announced that quarter. The biggest of the deals was the sale of a 51% stake in Shell Refining Co (Federation of Malaysia) Bhd to a unit of China’s Shandong Hengyuan Petrochemical Co (see table).
With five deals, it topped Mergermarket’s league table of financial advisers in Southeast Asia in terms of deal count for the quarter. But in terms of deal value in the region, it did not rank among the top 10.
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