17 October 2016
Kuala Lumpur: CIMB Group Holdings Berhad (“CIMB” or “the Group”) and China Galaxy Securities Co. Ltd. (“China Galaxy Securities Group”) announced today that they, through their wholly-owned subsidiaries CIMB Group Sdn Bhd and China Galaxy International Financial Holdings Limited (“CGI”) respectively, have signed a heads of terms to explore a strategic partnership in the stockbroking business comprising institutional and retail brokerage, equities research and associated securities businesses (“stockbroking business”) and to identify further areas of co-operation in the relevant markets where they operate.
CIMB, one of Asia’s largest universal banks, and China Galaxy Securities Group, one of the largest Chinese securities companies, are negotiating a 50:50 joint venture (“JV”) in the stockbroking business.
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.
The JV sees two leaders in their respective markets combine their expertise and reach to scale up and take the business to the next level. Furthermore, through the JV, the Group will be in an advantageous position to capitalise on China-outbound M&As 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.
Group Chief Executive, CIMB Group, Tengku Dato’ Sri Zafrul Aziz said, “This partnership heralds the future for the stockbroking business. 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 the China Galaxy Securities Group as a partner in this JV, CIMB will also be better placed to capture the growing trade and investment flows with China.”
Following signing of the heads of terms, the parties will finalise negotiations and target to execute definitive agreements within three months.