Citic keen on CLSA, quirks and all

PUBLISHED : Tuesday, 31 July, 2012, 12:00am
UPDATED : Tuesday, 31 July, 2012, 12:00am


Citic Securities says it plans to keep the quirky corporate culture of CLSA Asia-Pacific Markets intact if it secures control of the Hong Kong-based brokerage firm.

Founded in the late 1980s by Jim Walker and Gary Coull, two former South China Morning Post journalists, CLSA carved out a niche in the broking world by producing controversial research reports and staging high-profile events starring the likes of US commentator Sarah Palin and Hollywood actor George Clooney.

Yin Ke, vice-chairman of Citic Securities, the mainland's biggest brokerage by assets, said the acquisition of CLSA would boost the share of his company's overseas revenue to 20 per cent from about 6 per cent now, helping realise its ambition to become more international.

The proposed acquisition took about three years to negotiate before it was announced last week. It calls for Citic Securities to take over CLSA completely in two stages for a total of US$1.25 billion from CLSA's struggling French parent company, Credit Agricole. Much of what made CLSA distinctive will remain.

'We will keep all CLSA staff and all those CLSA services and products that CLSA clients have enjoyed for years,' Yin said.

'For example, you will still see some [non-financial] celebrities join CLSA's upcoming investment forum, and you will also continue to get the famous annual [fung shui] report from CLSA.'

CLSA's annual market forecast based on fung shui gets a lot of attention in the finance world.

After the acquisition, CLSA's existing compensation and incentive scheme would also remain unchanged, Yin said. All told, Citic Securities has more than 13,000 employees, mostly on the mainland, while CLSA has about 1,500 staff.

Yin, a veteran investment banker who started his financial career at the Shenzhen stock exchange in 1991 when it was launched, was Citic's key negotiator on this deal and a leading member of Citic's team working on a planned investment in Bear Stearns in 2008 at the height of the global financial crisis. The deal never went ahead and the legendary Wall Street investment bank later went under.

The 2008 crisis altered the global financial landscape. Many global banks have cut staff in Asia or even closed regional offices. For example, last week, US investment bank Piper Jaffray decided to close its Hong Kong office because it said it did not have enough resources to support growth.

'Exits of those global banks in Asia provide a very rare opportunity to us to grow even stronger and faster in the region,' Yin said.

'Foreign banks can quit, but we can't because we consider this market is really like our home.'

Before Citic Securities opted to buy CLSA, Yin said it pitched other deals, including buying some assets of loss-making Royal Bank of Scotland and MF Global, the troubled financial derivatives broker.

'We think CLSA together with Citic Securities will be the perfect match because we have known about each other for a long time,' Yin said. 'We chose CLSA because we want to be more focused now because we believe our focus should be on the Asia-Pacific region.'

He said he learned first-hand from his Bear Stearns experience of the importance of having a clear business focus. 'Bear Stearns had many complicated products that I didn't personally understand how they worked or even understood their names, to be honest.'

Citic Securities also recently opened a New York office whose function is mainly to serve Chinese corporate clients in the US.