CIMB Chief Pushes Brother’s Case for Re-Election: Southeast Asia

Nazir Razak, head of Malaysia’s second-largest bank, is speaking out for his brother to be returned as prime minister amid concern the ruling alliance could lose more seats in polls that must be held within weeks.

“The present prime minister has a very clear path forwards in terms of the transformation of the economy,” Nazir, the chief executive officer of CIMB Group Holdings Bhd., said in a Bloomberg Television interview with Susan Li in Hong Kong. “If there’s a change there, it would disappoint investors and they would have to relook at their view of Malaysia.”

Elder brother, Najib Razak, is facing the most competitive general election in Malaysia’s history after the National Front coalition won the last poll in 2008 by its narrowest margin in more than five decades. The opposition, campaigning on an anti-corruption platform, is heading for victory, its leader Anwar Ibrahim, said this month.

The benchmark FTSE Bursa Malaysia KLCI Index has fallen 3.7 percent after closing at a record on Jan. 7, the worst performing major gauge in Southeast Asia this year, according to data compiled by Bloomberg. The ringgit has slumped 2.1 percent this year.

CIMB has been Malaysia’s biggest debt arranger and most prolific underwriter of initial public offerings for the past four years since Nazir’s brother became prime minister, according to data compiled by Bloomberg. The stock has doubled in value between Najib’s inauguration in April 2009 and the end of 2012, outperforming an 85 percent jump in the KLCI index.

CIMB has since slumped 5.9 percent as polls approach, the benchmark’s worst performing lender, Bloomberg data show. It closed 0.1 percent higher at 7.18 ringgit in Kuala Lumpur today.

‘Election Proxy’

“CIMB is seen as a direct election proxy because of the relationship of the CEO to the prime minister,” Alan Richardson, a Hong Kong-based fund manager who helps oversee about $110 billion for Samsung Asset Management Co., said by phone. “If the election result is seen as comfortable for Najib and Barisan Nasional, that stock will go up.”

Nazir, 46, joined the corporate advisory division of CIMB Investment Bank Bhd. in 1989 and became CEO of the enlarged group in November 2006 after the firm’s securities and commercial lending operations were combined. Since then, he has led the group’s expansion into Southeast Asia through acquisitions in countries including Thailand and the Philippines.

Share Sales

The Kuala Lumpur-based lender began dominating Bloomberg’s underwriting league tables for Malaysia even before Najib became premier. It has been ranked first for debt underwriting since 2005 and has topped the IPO underwriter ranking for seven of the past 10 years, according to data compiled by Bloomberg.

CIMB helped arrange Malaysia’s three biggest share-sales last year. Palm oil producer Felda Global Ventures Holdings Bhd. raised $3.3 billion, IHH Healthcare Bhd. sold $2.1 billion of stock and Astro Malaysia Holdings Bhd. issued $1.5 billion of shares.

Malaysia’s IPO market grew to become the world’s fifth largest last year, up from 14th in 2011, according to data compiled by Bloomberg. It overtook more established financial hubs, raising $6.8 billion, the data show.

Najib, 59, has streamlined bureaucracy and opened up more industries to foreign investors. Private sector spending has tripled since 2009, with government revenue at a record last year and the budget deficit shrinking, according to a government report released this week.

Corruption, Monopolies

Najib’s National Front coalition is seeking re-election after holding power for more than five decades in the face of a resurgent opposition led by Anwar. The prime minister took over mid-term after Abdullah Ahmad Badawi stood aside to take responsibility for the 2008 election result. The premier must dissolve parliament by April 28 for vote to be held within 60 days.

Anwar’s People’s Alliance has promised to clamp down on corruption, abolish monopolies and bring down living costs if it comes to power, according to its manifesto.

“If there’s a change in government, it’s actually an opportunity for investors to gain more in the long term,” Ong Kian Ming, a political analyst at Kuala Lumpur’s UCSI University and an opposition election strategist, said by phone. “In the short term, yes, there would be some jitters. Significant structural reform would lead to better economic policies that would make the country more competitive in the long run.”

Asean Expansion

CIMB has also grown abroad through acquisitions, most recently buying some of Royal Bank of Scotland Group Plc’s Asia-Pacific investment banking interests and a controlling stake in Bank of Commerce in the Philippines.

Southeast Asia will see more investment banking deals this year, albeit smaller in size compared to 2012, Nazir said. CIMB became Thailand’s top IPO underwriter last year, according to data compiled by Bloomberg.

“Thailand will be very active this year and Indonesia too will be interesting,” he said in yesterday’s interview. “The action in Asean will be more broad-based. Last year was more like Malaysia leading the show.”

The nation’s $288 billion economy grew at the fastest pace in 2 1/2 years last quarter as Najib boosted spending ahead of the election. GDP rose 6.4 percent in the three months through December from a year earlier, after a revised 5.3 percent gain in the previous quarter.

Najib’s government has identified $444 billion of private-sector-led projects, including a mass-transit railway and oil storage, to steer growth in the current decade under an economic plan unveiled after he came into power in 2009. He also aims to cut Malaysia’s budget deficit to 3 percent of gross domestic product by 2015 from 4.5 percent last year, according to the government report this week.

“I totally understand why the market can be a little bit edgy,” Nazir said. “Relevant to many markets, the role of government in the Malaysian economy is important.” The election outcome is “important to the future direction of the country economically.”