Haitong Securities Co. plans to revamp its Hong Kong investment bank, halting an expansion after the firm posted unprecedented losses last year.
(Bloomberg) — Haitong Securities Co. plans to revamp its Hong Kong investment bank, halting an expansion after the firm posted unprecedented losses last year.
The Shanghai-based parent sent a working group to review operations as part of a push to help Haitong International Securities Group Ltd. recover, according to Lin Yong, the chief executive officer of the Hong Kong-listed unit.
The parent company wants the firm to “regain its glory,” Lin said in an interview on Tuesday. Part of that plan will be to create “one Haitong” that brings all the businesses together and connects Hong Kong and mainland teams, the executive said.
Haitong International last month said it expected to post a loss of as much as HK$6.6 billion ($841 million) for 2022 amid volatile markets. Part of that was due to a shortfall of HK$3.4 billion from equity and debt investments in the secondary market and a HK$1.7 billion loss in private debt and equity investments. The firm is officially releasing annual results next week.
Lin, the long-time CEO, has held ambitions to grow Haitong International into a global investment bank. The firm will now halt any expansion of its investment business due to the losses, he said.
A spokesperson for Haitong International said business is as usual. Haitong Securities didn’t immediately respond to a request for a comment.
Hong Kong stocks last year suffered their biggest decline since 2011, with initial public offerings activity tumbling to the worst since the global financial crisis. That has weighed on the brokerages’ investment and underwriting businesses, and their exposure to soured high-yield bonds by Chinese developers dealt an extra blow.
Other Chinese brokers, including Bocom International Holdings Co. and China Everbright Ltd., have also posted heavy losses.
Haitong International has been trying to reduce earnings volatility stemming from trading and focus on advisory and fee-based operations such as investment banking. The firm back in 2020 said controlling risks would be a greater priority going forward. The brokerage has scaled back in both the US and Europe.
–With assistance from Amanda Wang.
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