IFR Asia - 13.10.2018

People

&Markets

TOP STORY INVESTMENT BANKS

Who’s moving where...

„ MITSUBISHI UFJ

FINANCIAL GROUP

has announced a

new structure and

leadership team

across its global

markets business.

Akihiro Kiyomi has

been named head of

equities and is one of

six new global heads.

In addition to Kiyomi,

Taku Namiki has

been appointed head

of corporate sales

and Akira Hoshino is

now head of foreign

exchange and local

markets trading. All

three are based in

Tokyo.

The three other

global heads are Paul

Lavelle, who is head of

institutional investor

sales, Atif Hayat, who

has been appointed

head of flow products

trading and Alex

Pierre, who has

been tapped to run

structured solutions.

They are based in

London.

MUFG has also

named regional

and deputy regional

heads. Pierre Ferland

is head of sales and

trading for Asia,

deputised by Teruhisa

Fukushima.

„ Makarim Salman

has left his role as

managing director

and bank analyst at

JEFFERIES in Tokyo.

Salman worked at

Jefferies for around

seven years. He

was previously a

senior analyst with

Macquarie Securities.

There is currently no

replacement for him

at Jefferies.

UBS to raise stake in China JV

Swiss bank gains first-mover advantage over global peers

UBSûISûONûTHEûBRINKûOFûBECOMINGûTHEûlRSTû

foreign investment bank to acquire a

majority stake in its Chinese securities joint

venture under new rules introduced this

year, after two of its JV partners announced

plans to sell their shareholdings.

China Guodian Capital said in a

statement last Thursday to the China

Beijing Equity Exchange, a government-

run bourse dealing with large share

transfers, it was selling a 12.01% stake in

5"3û3ECURITIESûATûAûmOORûPRICEûOFû2MBMû

(US$57.4m). After the sale, Guodian

#APITALûWILLûSTILLûOWNûAûûSTAKEûINû5"3û

Securities.

Meanwhile, Cofco Group said in a

separate statement that it is selling its

ENTIREûûSTAKEûINûTHEû*6ûFORûAûmOORûPRICEû

OFû2MBM

According to both statements, existing

shareholders will have priority to purchase

the shares and the purchaser of either stake

will be obliged to buy the other stake as

well.

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apply to increase its stake in a JV under the

new rules introduced in April, currently

HOLDSûAûûSTAKEûINû5"3û3ECURITIESû

meaning the combined purchases would

increase its shareholding to 51%, the

maximum currently allowed under existing

regulations.

Beijing Guoxiang Asset Management

    ûANDû'UANGDONGû0ROVINCIALû

Communication Group (14.01%) are the

other shareholders in UBS Securities.

One source said that the acquisition was

likely to be completed in the next couple

of weeks.

UBS declined to comment.

Assuming the deal goes through as

EXPECTEDû5"3ûWILLûBECOMEûTHEûlRSTû

foreign bank to hold a majority stake in its

securities JV under the new rules, which

were introduced by the Chinese securities

regulator to gradually open access for

foreign banks.

HSBC, which invested under the terms of

AûSPECIlCûDEALûBETWEENû#HINAû(ONGû+ONGû

and Macau, already has a controlling 51%

stake in a Chinese securities JV. UBS and

Goldman Sachs enjoy management control

of their JVs without holding a majority

equity stake.

MUCH FANFARE

Sino-foreign securities JVs have so far failed

to yield meaningful earnings, despite much

fanfare. Figures released by the Securities

Association of China in May show that the

COMBINEDûNETûPROlTSûOFûTHEûSIXûOPERATIONALû

Sino-foreign JVs fell by around a third in

2017.

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OFûJUSTû2MBMûWITHû#ITIû/RIENTû

3ECURITIESûRANKINGûlRSTûFORûTHEûSECONDûYEARû

INûAûROWûDESPITEûAûûDECLINEûINûNETûPROlTû

TOû2MBM

International banks have struggled

to gain much of a foothold in the local

securities industry, which has been

dominated by domestic houses with their

sprawling retail brokerage arms.

In addition, previous regulations that

CAPPEDûFOREIGNûBANKSûOWNERSHIPûATûû

and left the control of key licences in

the hands of domestic partners stymied

opportunities for foreign banks, causing

many to walk away from their JVs in

frustration.

The new rules raised the cap on foreign

banks’ shareholdings with a view to

abolishing it altogether after three years

and allow banks to apply for a larger set

of licences, triggering a renewed wave of

interest among international banks.

JP Morgan, which walked away from its

partnership with First Capital Securities in

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Group and Nomura have also said that

they have applied to set up new JVs, while

several other banks are expected to follow

suit.

Most market observers reckon that it

WILLûBEûDIFlCULTûFORûINTERNATIONALûBANKSûTOû

COMPETEûHEAD

ONûWITHûTHEûDOMESTICûlRMSû

though.

“The key for any international bank is

lGURINGûOUTûTHEIRûCOMPETITIVEûNICHEû&ORû

many, that doesn’t mean competing head-

to-head with the local houses for a lot of

the more vanilla business domestically,”

said Benjamin Quinlan, CEO at consulting

lRMû1UINLANûû!SSOCIATES

“For a lot of the global banks, the JVs

act as a relationship vehicle. It allows

them to develop close ties with domestic

investors and issuers, which is particularly

important in driving international deal

mOWv

THOMAS BLOTT, FIONA LAU