ING Group is currently in talks with Australia’s Macquarie Bank over the sale of its Asian equity sales, trading, research and equity capital markets businesses. The bank plans to retain its equity derivatives business in the region.The exclusive due diligence agreement includes operations in 10 Asian countries – Hong Kong, Korea, Japan, Taiwan, Thailand, Singapore, China, Indonesia, Malaysia and the Philippines, as well as ING’s Asian sales and trading desks in London and Asian sales desk in New York. The bank will continue to offer equity derivatives, mergers and acquisitions advisory, debt capital markets and fixed-income products, foreign exchange and treasury, structured finance and syndicated loans to clients in 12 countries in Asia.
“What we wanted to do is actually concentrate our business on servicing a select group of corporate clients, governments, financial institutions, and then cross-sell to them a range of what we call value-added products,” says an ING official in Hong Kong.
However, some market participants believe that the planned sale could impact its equity derivatives business, which ING began building up in Asia in 2002 with the hiring of former Goldman Sachs banker Trinh Du to head up a new Hong Kong-based structured and listed equity derivatives trading division. At the time, ING said the equity derivatives business would leverage off its equity franchise and banking and insurance networks in the region.
“If they lose the cash side of things they are probably losing distribution. They are losing the ability to have dialogue with the kind of people who could be buying their products,” says one head of equity derivatives in Hong Kong. “For Macquarie it makes sense because the bank has been a strong player in warrants and they understand derivatives reasonably well. This gives them a cash presence and allows them to expand.”
The move marks the latest small or mid-sized player to exit the cash equities market, following Indosuez WI Carr in 2001 and French bank SG in 2002.
The ING official said that the price of ING’s cash equities business is “very much dependant on the due diligence”. Both banks plan to make a further announcement before March 31.
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