CIMB, China Galaxy Securities explore regional stockbroking tie-up

PETALING JAYA: CIMB Group Holdings Bhd and China Galaxy Securities Co Ltd (CGS) are exploring a strategic partnership in the stockbroking business within the region.

In a filing with the stock exchange, CIMB said its wholly owned subsidiary CIMB Group Sdn Bhd had inked a heads of terms with CGS’s wholly owned subsidiary China Galaxy International Financial Holdings Ltd for potential partnership in the cash equities business comprising institutional and retail brokerage, equities research and associated securities businesses in the region.

CIMB said the proposed 50:50 joint venture (JV) is subject to the negotiation and is targeted to execute definitive agreements within three months.

CIMB will continue to offer investment banking and capital markets products and services to its clients while the JV will 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 explained.

CIMB also said that the JV will see two leaders in their respective markets combine their expertise and reach to scale up and take the business to the next level.

For CIMB, it will be in an advantageous position to capitalise on China-outbound 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.

CIMB CEO Tengku Datuk Seri Zafrul Aziz Tengku Abdul Aziz said the model of the pure play JV broker working strategically with the bank is a hybrid model that paves the way for both parties to create stronger capabilities and depth to get ahead of the curve.
“We are also confident that with CGS as a partner in this JV, CIMB will be better placed to capture the growing trade and investment flows with China,” he added.