China brokerage said to be in talks to buy into CIMB Securities

Singapore

CIMB is in talks to potentially sell at least part of its brokerage in Singapore to a Chinese broking house, the head of the Malaysian lender's securities arm hinted on Thursday.

But nothing has been signed yet, CIMB Securities chief executive Carol Fong told The Business Times, adding that it was still in talks with "various parties", "everything is still at a discussion stage" and that the talks "are in no way conclusive".

Her comments came amid rampant market rumours that CIMB Securities is set to be sold to one of China's biggest brokerages. Speculation on the deal started a fortnight ago but went into overdrive on Thursday morning, market insiders said. Though Ms Fong declined to comment on the identities of the possible buyers, she said that the Chinese brokerage involved in the discussions was not Citic Securities. Citic is China's biggest brokerage.

Other major China broking houses include Haitong Securities, Guotai Junan Securities and Guosen Securities.

While Ms Fong did not elaborate on the nature of the discussions, there is also a chance that instead of a sale, CIMB is aiming to hammer out a partnership.

CIMB Group chief executive Zafrul Aziz told BT on Thursday that CIMB Securities was "open to a strategic investor who can bring value to our franchise".

CIMB Group Holdings was reported in late January to be in talks with foreign financial institutions to form partnerships for its securities business or to sell off at least part of the group's stake in the securities arm, according to a report in The Edge.

Brokerages in Singapore have been suffering of late from stiff competition in a lacklustre equities market that has been driving down trading commissions.

CIMB was reported to be giving up one storey or 13,640 square feet of the 130,000 sq ft that it has been leasing at the Singapore Land Tower in a bid to cut costs. CIMB Securities was quoted in a recent The Straits Times report as saying that it "is hunkering down as the Singapore market is going through a difficult phase . . . The securities business was a big contributor to CIMB Singapore's revenue and profitability six to seven years ago. Today, that's no longer the case."

CIMB entered the local brokerage market in 2005 after forking out S$239 million to snap up GK Goh's entire stockbroking business. GK Goh Stockbrokers was at that time Singapore's second largest stockbroker. The brokerage was renamed CIMB-GK Securities; but "GK" was dropped from the name in 2010. Taiwanese brokerage KGI paid about S$38 million to buy Singapore broker AmFraser Securities in 2014. Malaysia's biggest lender Maybank bought Singapore's Kim Eng Holdings in 2011 for S$1.79 billion.