Country Group Securities has been inevitably forced to diversify its securities business to focus more on non-brokerage income after facing fiercer market competition sparked by the entry of three new players.
The brokerage, like other houses, was stormed by manpower headhunters looking for some of the industry’s 5,000 stock traders.
After the new players, Apple Wealth Securities, Asia Wealth Securities and AEC Securities, entered the market at the end of last year, the traders were hunted with the promise of at least doubling their salaries.
When traders are hunted, it means their clients are taken too.
On top of the fiercer competition, margins from brokerage income are falling amid the stock-market stagnation caused by the prolonged political turbulence. Daily trading volume is now around Bt28 billion, compared with Bt50 billion last year.
Country Group Securities (CGS) also lost its top executive Prasit Srisuwan, who joined Apple Wealth Securities along with a number of his staff, in November. The staff who left with Prasit were the same ones he took with him when he joined CGS a few years ago.
As a result of the exodus, Chanachai Joonjiraporn and Sudthida Chirapatsakul were named CGS’s co-chief executives.
"The broker, which relies on brokerage income accounting for 90 per cent of its total income, has tried to diversify its business to other segments like investment banking and financial-advisory services," Chanachai said.
He said CGS had 4-5 per cent of the market’s total securities-trading volume, ranking it among the top five firms.
He said the brokerage planned to restructure its organisation by setting up a holding company, which would have several subsidiaries such as brokerage, investment banking, financial advisory and venture capital. This would make it more flexible.
Chanachai said the company would delist its shares from the Stock Exchange of Thailand and then apply for a share listing for the holding company. All shareholders of CGS would be offered new shares in the holding company at no cost.
However, shareholders would first have to approve the setting up of the holding company. A shareholders’ meeting is scheduled for April 29. If approval is given, Chanachai expects the company to be in place by September.
"By establishing a holding company, we can seek interests in companies forming strategic alliances with each subsidiary," he said, adding that the brokerage would also be able to invest in overseas markets more flexibly.
Sudthida said CGS posted a Bt344.81-million net profit from revenue of Bt2.07 billion last year, compared with a Bt260.39-million net profit from revenue of Bt1.61 billion in 2012.