KUALA LUMPUR: CIMB Group Holding Bhd said it is closing its offices in Sydney and Melbourne as it no longer believes its operation Down Under is profitable.
“We no longer believe that our Australian operations can be profitable given the minimum cost of operating in the market and dwindling margins in IB (investment banking) and equities,” CIMB acting group chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz (pic) told The Edge Financial Daily yesterday when contacted.
“We intend to grow our strategic alliance with Morgans (Financials Ltd) instead of operating on [the] ground ourselves and we believe our strategic ambition of being a leading APAC [Asia-Pacific] IB powerhouse is now enhanced as this move improves profitability and long-term sustainability and enables us to focus better on our other markets,” said Zafrul.
In a statement, CIMB said the decision to close its Australian operations follows an announcement last Friday in which CIMB stated it was looking to reduce its Asia-Pacific investment banking and equities operating cost by 30% in 2015.
In the statement, Zafrul said the banking group had taken a long, hard look at its Asia-Pacific investment banking business.
“The realities of today’s capital markets and the absence of sufficient flows have directly contributed to this decision. The rest of our Asia investment banking platform remains intact,” he said.
He said the decision would impact the majority of CIMB’s 103 Australian staff, who will be offered redundancies, some redeployment opportunities, and outplacement support.
“CIMB will continue to support its clients who want access to the Australian market through its current strategic alliance with Morgans,” he said.
CIMB’s counter fell as much as 1.89% or 11 sen yesterday to RM5.69 before easing to close at RM5.70 (down 1.72% or 10 sen), with a market capitalisation of RM48.18 billion.
This article first appeared in The Edge Financial Daily, on February 10, 2015.