Asia's finance industry moves to fill Barings shoes
Asia's finance industry moves to fill Barings shoes
SINGAPORE (Reuter): Asia's banking and broking industry was already jockeying yesterday to fill the hole left by Barings after disastrous derivatives trading in Singapore ended the prestigious British bank's reign.
Barings held the top position in magazine Asiamoney's brokers' poll for four consecutive years to 1994 and was ranked top in regional sectoral research last year.
Its demise could put clients, business and staff up for grabs in a competitive year when regional stock markets have tumbled and fees are down.
"It's a disaster for Barings employees but from the brokers' point of view the fall couldn't be better placed," said a competitor in Malaysia, where the bank had a research office and investment advisory license.
"It's obliterated opposition overnight. They were a force to be reckoned with and now they are history."
In Singapore, Barings was ranked the number one futures market maker for the Nikkei 225 contract and top foreign stock broker, traders said.
Brokers predicted Smith New Court Plc could step into its shoes as top foreign broker.
Futures traders said the Singapore unit of Bankers Trust New York Corp yesterday was already handling the trading positions of the suspended bank.
A bright spot for Singapore authorities was that the scandal might put off development of a competitive futures exchange over the border in Malaysia, said Ang Kok Heng, general manager of research at TA Securities in Kuala Lumpur.
"It may delay the start of the futures market in Kuala Lumpur because of new concerns about derivatives trading," Ang said.
In Hong Kong, already suffering a glut of bankers and brokers after layoffs and a bad year on the stock market, the loss of Barings was the second disappearance of a finance house in a week, easing competitive pressures.
Travelers Inc. unit Smith Barney Inc. said last week it was virtually ending its corporate finance activities in Hong Kong over the next two months, cutting 25 bankers.
"Baring Securities is one of the largest employers in the industry in Asia. When you dump 70 analysts onto the market, you are dumping a lot of people out there," said John Wright, director at Hong Kong recruitment firm Executive Access Ltd.
In the Philippines Barings has been the country's biggest brokerage in 1994 in terms of volume.
"There will be some shifting to other houses," said Lisa Joson of Morgan Grenfell Philippines.
Indonesia
Indonesia was fearing a knock-on effect on the local market from the Barings crash.
"We basically share the same clients with Barings. We are afraid the fallout could have a domino effect if it failed to settle on time," said a vice president with a Hong Kong-based brokerage house in Jakarta.
"If Barings fails, who would you be able to trust," he added. Barings was one of the top three brokerages in Indonesia.
In Pakistan, Barings was placed in the top three foreign fund managers but was not a member of the stock exchange.
Recently the bank had been shrinking its business, said a source within the bank. "We don't think our competitors will take our business," said the source, clinging to the hope of a bailout.
In Australia Barings has 19 percent of stock broker McIntosh Securities Ltd. and 50 percent of merchant bank Baring Brothers Burrows, but no direct presence.