Bloomberg pix.
HONG KONG: The culture clash between CLSA Ltd.’s old guard and its Chinese owner may have reached a tipping point.
At least four of the Hong Kong brokerage’s most senior managers are following Chief Executive Officer Jonathan Slone out the door amid mounting tension with Citic Securities Co., which bought CLSA in 2013, people with knowledge of the matter said.
Chief Operating Officer Nigel Beattie, who was in discussions to take over as CEO in the wake of Slone’s recent resignation, quit this month after failing to reach an agreement on how to run the company, the people said, asking not to be identified because the matter is private.
Xen Gladstone, who ran sales and trading; Edmund Bradley, head of research; and Meade Thomson, head of Japan, also resigned, one of the people said.
The latest departures, which include three members of CLSA’s executive committee, highlight long-simmering concerns among some employees that the firm is losing its culture and independence as Citic, China’s biggest state-owned brokerage, tightens its grip on the business.
Citic’s takeover was viewed by some in the industry as a test case for whether a Chinese brokerage could successfully expand overseas and compete with the likes of Goldman Sachs Group Inc. and Morgan Stanley.
While Citic said last month that it’s committed to expanding internationally, the combined company has yet to come anywhere close to matching the global reach of Wall Street’s giants.
Some analysts have said that the departure of highly compensated executives such as Slone will help CLSA cut costs and boost profitability. But questions remain over whether the loss of seasoned international leaders will hurt the firm’s ability to grow its business outside China.
A CLSA representative declined to comment, as did Beattie. Gladstone, Bradley and Thomson didn’t immediately respond to requests for comment. Citic, whose chairman Zhang Youjun took over the same role at CLSA in February, didn’t immediately reply to an emailed query.
Skeptics of the Citic-CLSA tie-up have warned of a culture clash since day one, yet the two camps managed to keep tensions under control long enough to combine the businesses and weather a turbulent period for global capital markets.
That changed after a controversial drop of about 60 percent in CLSA’s 2018 bonus pool and a number of other recent changes instigated by Citic, including staff adjustments and an overhaul of CLSA’s compensation structure, people familiar with the matter said last month.
Some members of CLSA’s executive committee, including Slone, didn’t receive a bonus for 2018 and were asked to take a pay cut for this year, two people said.
In a March 6 memo to employees, Zhang said the new pay structure would “incentivize the growth and development of our people while balancing their authority, responsibility and compensation.”
Citic tried to convince Slone to stay, Zhang told a media briefing last month, adding that he resigned for personal reasons and would spend more time with his family in New York.
Citic shares were down 2.1 percent at 1:17 p.m. in Hong Kong, heading for a fourth day of losses.
CLSA, whose no-holds-barred research and star-studded investment conferences lured generations of money managers to Asia’s markets, has about 2,000 staff in 20 offices across Asia, Australia, the Americas and Europe.
The brokerage became well known for its high-profile annual forums, with guests including former U.S. President Bill Clinton and a former heavy-weight boxing champion Mike Tyson. - Bloomberg
Limited time offer:
Just RM5 per month.
