CIMB cuts jobs in HK unit as markets worsen

People use CIMB automated teller machines (ATMs) in Kuala Lumpur, Malaysia.
People use CIMB automated teller machines (ATMs) in Kuala Lumpur, Malaysia.PHOTO: REUTERS

KUALA LUMPUR • Malaysia's second-largest bank CIMB Group Holdings said it has cut dozens of jobs in its Hong Kong investment banking and equities business as it struggles to manage costs amid deteriorating market conditions.

The cuts, which affected 32 staff, were announced in an internal memo and confirmed by group chief executive Zafrul Aziz yesterday.

A person with knowledge of the matter told Thomson Reuters publication IFR that the cuts accounted for nearly a quarter of CIMB's Hong Kong workforce.

After the job cuts, 110 staff remain at the unit, said the source, who declined to be named as he was not authorised to speak to the media. CIMB head of Asian research Chris Hunt was among the staff members who was let go, the source added.

The Hong Kong expansion for CIMB came after it bought the regional equity and corporate finance businesses of the Royal Bank of Scotland Group in 2012 - a purchase that has failed to generate sufficient revenue for the Malaysian bank.

Many investment banks are paring back their presence in Asia, where slowing growth in China's economy, market volatility across the region and a drop in deal volumes have forced lenders to cut costs.

Reuters reported earlier this month that Barclays will cut jobs in its Asian investment banking arm. CIMB, which spent the last decade expanding into South-east Asia, also said in July last year that 11 per cent of its workforce in Malaysia and Indonesia had opted for redundancy.

"The group is not spared... the harsh realities of the deteriorating capital markets faced by players with investment banking and equities businesses in Asia," Mr Zafrul said in the memo.

"We continue to face difficult markets, and we will need to be very focused to ensure that we remain relevant to clients."

CIMB implemented a series of job cuts last year. During the first half of last year, it cut about 50 jobs in Singapore, Hong Kong and other locations across Asia.

That was followed in July by an announcement of the departure of 1,891 employees in Malaysia under a mutual separation scheme, and the loss of another 1,708 jobs in Indonesia.

"The cuts are expected and encouraging," Mr Kevin Kwek, an analyst at Sanford C. Bernstein & Co in Singapore, told Bloomberg last Friday, in e-mail reply.

He said he expects further job reductions in future.

The cost-income ratio at CIMB fell to 56.2 per cent in the nine months to September, from 57.8 per cent in the corresponding period a year earlier, the bank said in its third-quarter results.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on January 19, 2016, with the headline 'CIMB cuts jobs in HK unit as markets worsen'. Print Edition | Subscribe