The growing international trend for banks to be bypassed in their traditional role as intermediaries in the process of corporate fund-raising, labelled financial disintermediation, has driven Bank of America to boost sharply its securities capability in Asia.
Traditionally a bank with a strong corporate banking stream, Bank of America is taking the initiative to ensure it can accompany its blue chip customers when they go to the capital market.
The bank recently embarked on a hiring spree to beef up its securities operation and has poached David Walker-Smith from Chemical Securities to head its Asia securities unit.
It also took a trader from HSBC markets and a capital market practitioner from Kleinwort Benson to head the team on deal origination.
Banks are disintermediated when corporates switch from raising funds through them to tapping capital market by issuing commercial papers or bonds.
Having seen banks in Europe being disintermediated, Mr Walker-Smith said Hong Kong may catch the wave in three-to-five years.
'We need to build our capability to finance our customers outside the banking system, through securities,' he said.