Bank of America plans to close its Asian equity derivatives desks in Japan and Korea. "Frankly, it just didn't make sense. The business wasn't there," Yaz Aiuchi, president of Banc of America Securities Japan in Tokyo, told DW. BofA will try to find alternative positions for the 12 Asian equity derivatives staff. "Our number one priority is to find alternative positions internally. However, if there's no right position then we'll have to ask them to leave."
The team is currently discussing new positions, with the exception of Alex Mayus, head of equity derivatives trading in Tokyo, who is currently in New York working on winding down the Asian operation.
The closure comes on the back of a number of high-profile departures in recent months, including Nick Waltner, managing director and head of equity financial products in Tokyo, who is setting up a hedge fund (DW, 3/17), and Fumio Nashiro, principal of equity financial products, who joined Bear Stearns in Tokyo (DW, 3/8).
Aiuchi attributed the decision to close the Tokyo operation to the drying up of the equity-linked notes market last year, the fall in the Nikkei 225 and the Japanese government's decision to create an entity to acquire strategic cross-share holdings, resulting in a decline in demand for corporate equity derivatives.
BofA aims to close the operations on April 30. However, the firm will continue to handle cross-border equity derivatives transactions, with trading handled out of BofA's U.S. centers. Marketers integrated into other groups in Tokyo, such as the investment banking division, will work on cross-border transactions.
BofA was one of the largest players in the equity derivatives market in Korea, according to a rival in Hong Kong. "From a competitor's perspective, this is healthier for the market," he said, adding that "They were aggressive on expanding into Korea and were very competitive in pricing." A BofA official in Korea said "We've had several talks with management, it wasn't a complete surprise."
An equity derivatives head in Tokyo added, "In Korea they were substantial competitors. Last year [in Tokyo] everyone had a tough year, traditional corporate derivatives were fairly quiet." He continued, "BofA had talented people but they weren't as strong last year as they had been in previous years."
