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SCMP Reporter

Global investment banks began circling the Asia-Pacific arm of Barclays de Zoete Wedd (BZW) last night, as the future of the firm and its 1,200 staff hung in the balance.

 Regional chairman and chief executive Roger Davis, who has been in London for the past two weeks, arrived back in Hong Kong yesterday to begin handling the sale of BZW's Asia-Pacific units.

 'We have already had expressions of interest,' Mr Davis said, adding that 'with the status of our current discussions, we would hope to finalise any announcement in a matter of weeks, not months'.

 Rumours began circulating yesterday that US investment banks, Bankers Trust and Donaldson, Lufkin and Jenrette, who were the last to drop out of bidding for the whole of BZW might now be taking a fresh look.

 Both are thought to be eager to expand their presence in the region, where they are relatively small.

 Some analysts said that even National Australia Bank, which recently bought NatWest Bank's County NatWest Australia Investment Management arm, might also be a contender for BZW Asia.

 The bidding process comes after BZW's parent, Barclays, failed to sell off all the BZW businesses as one chunk as it had originally intended.

 It has confirmed it is in talks with Credit Suisse First Boston, but only for a prospective purchase of BZW's equities, capital markets and corporate finance businesses in Britain and Europe.

 BZW's business in Asia and Australasia, as well as equity derivatives business are still available, which an official said contributed about GBP100 million (about HK$1.3 billion) in the six months to June 30 out of a total GBP692 million of earnings at BZW as a whole.

 Mr Davis said BZW Asia was very profitable, and had a good franchise of businesses across the region and a good track record.

 The group's results are not separately broken out, but as a whole BZW reported first half profits of GBP124 million, and a return on economic capital of 12 per cent.

 It is understood BZW Asia has a return on capital well in excess of this, but officials are unwilling to publish a figure, as much still depends on how the group is structured, and where capital is eventually deployed.

 Mr Davis said he was keen to find a buyer for the business who had a long-term vision for Asia, combined with sufficient financial muscle to retain a commitment to the region.

 This is thought to rule out several European banks whose shareholders may not be willing to tolerate the heavy investment in resources required in investment banking, and the limited early returns gained from such a business.

 In the previous negotiations, BZW is understood to have preferred US bidders.

 'We want someone who shares the vision of Asia that we hold,' Mr Davis said.

  Rival investment banks were yesterday questioning BZW Asia's profitability, and its status in the Asian market.

 'It is not a must have is it?' one Hong Kong-based banker said.

 'If there are five top players [in Britain and Europe], BZW is one of them. Out here if there are five top players, is it one of them?'  BZW hired Mr Davis last year to run their Asian operations, after he was poached from Jardine Fleming by BZW's then chief executive Bill Harrison.

 Mr Harrison resigned last month, after the decision to sell the BZW businesses. Mr Davis said it was his intention to stay with the firm.

 He said guaranteed bonuses were being paid to key staff, and that he wanted to achieve the best deal for the rest of the staff, who had so far 'responded magnificently' to the uncertainty by staying loyal to the firm. 'Our focus is keeping the business together, talking to the staff and making sure clients understand it is business as usual.' 



BZW puts out 'for sale' mat