Nazir Razak was recently interviewed by Chris Wright from Euromoney on the Asia Voices podcast (link here). It was a wide-ranging conversation where he talked about his family, building CIMB, the 1MDB scandal (all topics covered in his new book “What’s in a name”). Some notes are below; these are paraphrased and for personal reference only, so any mistakes in transcription are my own.
On his father’s legacy – writing the book was also a journey for him to discover the father he lost at a young age. Being Tun Razak’s son is a huge part of his life, as he was a towering figure in Malaysia. Understanding his father is also about understanding himself better. Tun Razak was the master builder of Malaysia. He set the stage for the education policy, rural development, among many other things. When there was a breakdown in civil order in 1969/70, he became Prime Minister and spearheaded the national reset. The system he put in place remains the underpinning of today’s system. But perhaps more important and durable than his tangible legacies were his values. One has to understand the things he did in the context of what Malaysia was like in those days. Malaysia today is very different. Faced with the current situation, he would be the first one to say things need to be reformed.
On his early career at CIMB – he joined in 1989 as employee number 69. At the time, he had offers from bigger and more established banks, but he joined an organization where he thought he could make a difference. They worked extremely hard, had to learn and build everything. Took on the Barings model, who were their shareholders at the time – focus was on merchant banking, advisory services. At the time, it was all about IPOs. Malaysia was one of the Tiger economies in those days, so much money was piling in and regulation often struggled to keep up. Animal spirits really got into everyone. Winning the Tenaga IPO was such an important deal, changed the landscape of corporate Malaysia. At the time, Malaysia had a “nanny” capital market, where the government dictated what you could charge clients for advice. The Tenaga IPO changed many rules including that IPOs could only be offered to locals, first roadshow etc.
On becoming CEO at 32 – he would not have done as much with CIMB if he took it on at a later, more conservative age. He was young, in a hurry, much braver then. But he also understood his own weaknesses, so he made sure he had a lot of gray hairs around him. Looking back, he probably went overboard at times and neglected work-life balance and his health, which perhaps led to many other things including the early onset of cancer. If he had to do it all again, he would still want to do most of it, but would probably spend a little bit more time outside work.
On lessons about growing a bank through deals – execution is paramount, and in-country mergers are probably easier to do. Realizing cross-border synergies are much tougher. He bought into the whole ASEAN story in terms of free movement of capital, people etc. Most of that didn’t come through. Left them with an ASEAN platform but without the free flows it was meant to benefit from. Culture is also very important – Malaysia, Indonesia are very different places to work. People joke the Philippines is a Latin American country in the wrong place. One really needs to understand the nuances of working in each country.
On the RBS acquisition – looked cheap at 80 cents to the dollar, but the ability to integrate a global bank with the CIMB culture was a huge undertaking. Could have done it if he spent all his time on it, but he had a huge empire by then and had to delegate. Global investment banking pre-GFC had really gone on steroids and they were still suffering from it. The RBS team never really bothered that the company made losses, expectation was that people would still be paid high bonuses. That was culturally very contradictory to their bank. Work ethic was also very different. Some of the stuff they bought was also embryo-stage (e.g. India, Taiwan, Korea) – CIMB brand didn’t resonate in those markets, going from RBS to CIMB was like a loss of brand despite their strong platform in SEA.
On walking away from a deal – really need to cut through the reports presented to you. Everybody on the job wants the deal done because they are invested in it and get compensated from it closing. As the ultimate decision maker, you need to think about after the deal, when this thing is yours. He learnt his lesson from RBS, but fortunately it was still a relatively small deal in the scale of CIMB. But if they had gone ahead with the proposed 3-way merger with RHB and MBSB, it would have been disastrous. That was not the only deal they walked away from. Some of the best deals are the ones you don’t do.
On ASEAN – completely agree that it failed to reach its potential. If you look at the 2007 charter, it said by 2015, would be a single production base, free movement of people, capital etc. It was 1 year late and even then it wasn’t what was described. Tariffs went down but non-tariff barriers went through the roof. Even for banking, came up with the ASEAN qualified banking framework, but if you go through to the details, there wasn’t much there. Supposed to be a multilateral agreement but it said to do things bilaterally. Didn’t focus on what was important in terms of building regional platforms. The businesses that were trying to become regional platforms all faced similar constraints (e.g. AirAsia, Ayala, Siam Cement). ASEAN needs to find its own path. There are hard lessons to learn from other regions, including on the social and political side. Will need to take into account as we redefine what we want to create in the region.
1MDB – he was suspicious from the very beginning (e.g. 2009, when they did the MYR 5bn bond, and he saw the pricing and flawed manner in which the deal was distributed ). He did his bit in terms of flagging it to various people – more than most, but perhaps not enough. CIMB stayed away from 1MDB, which made things difficult as it became the flagship vehicle for Malaysia in many ways. He had problems with his own people, with all these fees going to other banks, yet he wouldn’t allow them to get involved with 1MDB deals. Still don’t know the full story in terms of why, what really transpired etc. What he has shared is based on what he saw, analysis in terms of what he thinks, but he doesn’t know.
On lessons learnt – didn’t happen in a vacuum, was the result of the concentration of power, the wrong influences coming to bear. He is very much in favor of reducing the power of the PM, strengthening the checks and balances in the system. He admits that the concentration of power, hardening of identity politics, corruption are side effects of the system his own father put into place.
On Mahathir’s legacy – he never doubted his motivations. Thinks he is a true nationalist, wanted what was best for Malaysia. But he felt he knew what was best for Malaysia and that is perhaps where some of the problems lie. He was an ends justify the means kind of guy, wanted concentration of power because he felt he needed it to get things done. He did that in the late 80s and 90s and wanted to do it again this time, which was part of the reason for his downfall couple of years ago. Nothing wrong with the motives, but maybe something wrong with the methods.
On his relationship with Malaysia today – he is very much a nationalist, wants what is best for the country. But he decided that his way of doing that is not by becoming a politician. He has discussed why a deliberative platform is needed and why parliament itself cannot deal with some of these long-term structural issues the country faces. Governments come and go, more important is contributing to the discourse about building a better Malaysia. He hopes that some of his ideas will resonate with the new generation of leaders.