HONG KONG (Reuters) - Citigroup’s (C.N) former Asia Chief Executive Robert Morse and two former colleagues announced the launch of a new financial services firm on Wednesday, having raised $1 billion with hopes of competing against major banks.
The new firm arrives as U.S. and European banks lose business and top talent amid the global financial crisis that has crippled several large institutions.
Morse, 53, is one of several former top banking executives in Asia to quickly start a new venture after a long career on Wall Street. The 23-year Citi veteran will be chairman and CEO of the new firm, Primus Financial Holdings.
Former HSBC (0005.HK) Asia investment banking head Huan Guocang, who was hired by Morse and later became a top China dealmaker for Citigroup, is co-chairman of Primus Financial, while Wing-Fai Ng, a former managing director at Taiwan’s Fubon Financial (2881.TW), is co-CEO.
Morse told Reuters on Wednesday that Primus Financial plans to raise more capital beyond the $1 billion it brought in from a single investor. He also said the financial services firm plans to open an office in New York to build out a fixed income group.
“We don’t anticipate buying a bank, fixing it up and selling it,” Morse said in an interview on the sidelines of a FinanceAsia conference here on Wednesday. “We anticipate buying a number of entities and integrating them and maybe later taking it public or selling the whole lot. But we hope to build an institution that lasts through the ages.”
Huan and Ng are co-founders of a separate private equity fund, Primus Pacific Partners.
Hong Kong-based Primus Financial plans to run a firm with wholesale banking, fixed income and equity sales and trading, advisory, and private wealth management.
The firm said in a release that it will also manage an alternative investment platform, focusing on distressed debt in the United States and emerging market private equity.
Its focus includes most of Asia with the exception of Australia and includes insurance investing as well.
“You can build a brokerage business, buy it, or do a combination of the two,” Morse said. He noted when Citi’s Salomon Smith Barney bought Australian brokerage CountyNatWest in 1998.
“We bought that brokerage business for below book value and we got the people, the buildings, the technology, the relationships,” he said. “That time period and now are analogous. So I think it’s possible to make acquisitions now at very, very cost effective prices.”
Morse added that now is a great time to acquire people too.
“There are a lot of people working in financial institutions who are unsatisfied with where their institutions are or where their jobs are going. So the availability of talent is very high.”
Morse, whose formal title at Citi was CEO of Citigroup’s Asia Pacific institutional clients group, left in August.
Top bankers from Merrill Lynch to Credit Suisse to Goldman Sachs have set up new, Asia-focused firms, as the financial crisis caused most banks to cut back on headcount and bonuses.
Though valuations are down, Primus Financial faces plenty of challenges, said Kenneth Zhou, a Wilmer Cutler M&A lawyer. He said winning regulatory approval for deals in Asia can be tough.
“Taking China as example, the regulations for foreign investors to buy into domestic financial institutions is tough and strict,” he said.
Primus Financial is preparing to grow, in part, through acquisitions, a process the three partners know well.
Among the deals under Morse’s watch was a Citi-led consortium buying control of Guangdong Development Bank for $3.1 billion, beating rival bidder Societe Generale (SOGN.PA).
“I doubt that Citi is concerned about our company right now,” Morse said, when asked if he’d be competing directly. “Citi is a bank with enormous capabilities which has been around for 200 years. That said, we hope to offer to our banking customers a compelling proposition of price and value that would allow us to compete against everyone.”
Editing by Jean Yoon