Newcomers to Asia banking scene fight for survival

(Reuters) - Newcomers to the broad Asia banking market are slugging it out in a fight for survival, facing a shrinking fee pool, fewer deals, and weak trading volumes.
Some brokerage and advisory shops new to the group of regional players are pressing ahead with their Asia growth plans, undeterred by the tough economic climate and bent on using the broader industry struggles to their advantage.
In the race to tap Asia's growth, however, other growth-minded firms are showing signs of fatigue, with one already out of the game and others expected to be casualties in a regional shake out.
The survivors are likely to be those that are able to develop a niche. The rest risk being swamped in the sea of banks covering the booming, yet relatively small, region compared to the fees generated in the United States and Europe.
For example, Petrochina and ICBC (1398.HK) each have more than 40 analysts covering their Hong Kong-traded shares.
"There's no other food to be had elsewhere in the world," said Chak Wong, a professor at the Chinese University of Hong Kong and previously a managing director at UBS and Barclays Capital. "This is the only place where you see some hope of growth, and that's why everyone is still rushing in."
Japan's Daiwa Securities Group had pushed hard into the Asia brokerage market, beefing up units in cities such as Hong Kong. While the bank said it will continue to pursue that strategy, it announced last month that a $520 million cost-cutting plan was not enough.
Included in that plan was ending proprietary trading in Hong Kong and Taiwan and scrapping 300 overseas jobs. The Japanese firm is also planning to sell its synthetic prime brokerage, which has desks in Hong Kong and New York, to Canada's Bank of Nova Scotia, two people familiar with the situation said on Thursday.
South Korea's Samsung Securities also made a heavy push across Asia after the 2008 financial crisis, though the pace of its Asia expansion now appears to be slowing. Chief Executive Park Chun Hyeon said last November that the company planned to set up shop in Taiwan and Singapore in 2011.
A Samsung Securities spokesman in Hong Kong said it still intends to set up an office in Taiwan, but it wants to open in Singapore first, where it awaits a licence.
Early casualties include Knight Capital, which announced in August the closure of its institutional equities operations in Hong Kong, having entered the market in 2009.
"For the third- or fourth-tier brokers, there's just no way to compete with the big guys," said Ronald Wan, managing director at China Merchant Securities in Hong Kong.
"Some of these that made a push are actually laying off people now."