SHOWS: HONG KONG, CHINA (JANUARY 11, 2012) (REUTERS - ACCESS ALL)

JIM ANTOS, BANKING ANALYST, MIZUHO SECURITIES

1. REPORTER OFF CAMERA SAYING:

'What do you think of CIMB and its CEO Nazir Razak? Will CIMB's acquisition of RBS' equities business work or are there challenges?'

2. JIM ANTOS SAYING:

'You know the thing is in Malaysia really there are two banks that continually compete with each other. That's CIMB and Maybank, 2 big banks you know. And especially in mergers and acquisitions, it's a kind of a 'me too' type of situation. So you know that Maybank bought Kim Eng Securities in May last year. I think that's one of the driving forces to keep up with local competition. It's why they bought RBS Securities, you know. They bought a lot of overhead there and they bought it at a time when capital markets are doing poorly. It's mainly an equities business. I'm in the equities business and this has been a terrible year. So I think, you know, the initial take is, it's probably not the best use of capital that you can think of. I think, on the other hand, CIMB is a brilliantly run bank. They've tremendous regional strategy. The management, the head of treasury in particular, is very brilliant to tell you the truth. So I'm very strong on this particular bank but I do think M&A is a minefield.'

3. REPORTER OFF CAMERA SAYING:

'You were worried about non-performing loans among China banks in 2012. What is the situation of non-performing loans in those Big 4 banks now?'

4. JIM ANTOS SAYING:

'You know, the thing is actually we have the total loan data also for the whole banking sector. And the economists-I'm a bank analyst, there's a difference-the economists are saying, 'gee, we're a little bit disappointed here. The loan growth in the month of December is a little bit down.' But there's a seasonal pattern. It's always down in the fourth quarter and there's a quota for lending and the banks had overshot the target already by the time you got to September. And then of course you've got social financing, so I think that if you look at the total credit available in China, it's right on track. We've got about 15% loan growth this year. That's very sensible. It's a lot better than where we were in 2009 when we had 31% loan growth.'

5. REPORTER OFF CAMERA SAYING:

'You have a buy on China Construction Bank and ICBC, and underperform on Bank of Communications and China Merchants Bank. Why?'

6. JIM ANTOS SAYING:

'You know what? Actually I'm in the process of rethinking this. I think I'm a little bit too pessimistic right now. And I think the thing is that I've tended to prefer the large banks. They're well capitalized, they've tremendously high ROE above 20%, you don't see that anyplace else on earth. But I'm thinking, you know, as we going into this year, the small banks are going to do pretty well too, so I just have to review those ratings. So I'm more positive now.'

7. REPORTER OFF CAMERA SAYING:

'Why are you more positive on small banks now, as they are the ones that were hit the hardest with previous interest rate cuts?'

8. JIM ANTOS SAYING:

'Three words: Xi Jinping. I think the change in leadership is much more important for bank stocks than you might think. I think we've already seen a rally here since about September 14th. It took a little bit of a pause in November and it's kind of off to the races right now, why is that? Because the market just is so positive about this change in leadership. And yeah, I think we have to take that into consideration.'