Securities firms consolidate their operations

Securities firms consolidate their operations

JAKARTA (JP): A number of local securities companies are
engaged in massive cost-cutting programs to cope with the
economic crisis -- laying off key personnel and consolidating
business units.

Deutsche Morgan Grenfell, for example, announced early last
week that its Indonesian equities operations would be
consolidated into its Hong Kong and Singapore hubs.

The firm's head of Equities Asia and Australia, Mark Cullen,
said this would enable the company to integrate its regional
operations more effectively into its global equities platform.

"It will concentrate our salesforce where the majority of our
institutional clients are located and significantly reduce
operating cost," he said.

Industry sources said many securities companies were shedding
highly paid, key personnel due to spiraling costs resulting from
a plunge in the rupiah's value against the U.S. dollar.

"Foreign executives who are paid in U.S. dollars are the main
targets of lay-off measures," the source said.

Most securities houses earnings are in rupiah as they generate
their earnings through transaction fees in the Jakarta Stock
Exchange.

Laying off expensive staff is not the only cost cutting
measure being taken.

Many brokerage houses are also leaving expensive offices.

Some of the brokerage houses currently occupying the expensive
Jakarta Stock Exchange building will soon move to cheaper
buildings.

"Most rental fees are in dollars and the sharp fall of the
rupiah against the greenback has caused an over 300 percent
increase in rental costs," a source said.

"The securities business (situation) is getting worse not
merely due to the rupiah plunge. A persistent drop in share
prices has scared away investors," the source added.

Indonesia is the worst-hit country in the region which is
being battered by monetary crisis.

The rupiah has falling about 80 percent against the dollar
since July last year and stock prices have fallen 28 percent over
the same period.

The rupiah closed the week at 9,400 Friday against a regular
2,450 in early July last year. The Jakarta Stock Exchange
composite index closed the week at 535.42 points against 740.83
points on July 8 last year.

PT DBS Securities Indonesia, 85 percent owned by DBS Bank of
Singapore and 15 percent by the Gajah Tunggal Group of Indonesia,
is also taking cost-cutting measures.

A reliable source in the company told The Jakarta Post late
last week that about seven top foreign and local executives,
mostly paid in U.S. dollars, would be laid off this week or next
week.

The source said the executives were working in the firm's
research, sales and marketing departments.

DBS Securities Indonesia employs 50 people in low level to top
level management positions.

The source said lower ranking management staff would be
maintained as the company would continue its operations in
Indonesia.

Previous reports said PT Sasson Securities Indonesia, PT
Credit Lyonnais Capital Indonesia and PT Lippo Securities had
made major lay-offs due to financial problems.

Early last November, Lippo Securities, one of the first
securities companies listed on the Jakarta Stock Exchange, fired
seven top executives as part of its efficiency program. (aly)