By Quentin Webb and Stella Yifan Xie

China's top investment bank is remaking an iconic Hong Kong brokerage in its own image, in a microcosm of how the Asian financial hub is changing.

Back in 2013, Citic Securities Co. completed a $1.2 billion takeover of CLSA Ltd., an institution known for its forthright research and glitzy investor events featuring keynote speakers such as Alan Greenspan and Bill Clinton. For years the buyer, also known as Citics, preserved CLSA's decades-old franchise, before changing its approach.

Over the last 18 months, Citics's tightening grip has resulted in a near-total clearout of CLSA's top ranks and fueled an exodus of many of the research analysts that helped establish CLSA's brand among investors.

The latest senior departure is Rick Gould, an American banker who joined CLSA in 2014 and was chief executive from April 2019. The firm hasn't named a replacement; earlier this year it appointed Charles Lin, a Chinese citizen and former head of Vanguard Group's Asia business, as vice chairman under Chairman Zhang Youjun.

Mr. Zhang, who is based in Beijing, is chairman of both CLSA and Citics. The latter, which has major offices in Beijing and Shenzhen, is an affiliate of powerful state-owned conglomerate Citic Group Corp.

CLSA's logo has been replaced by Citics's own emblem on Hong Kong initial public offering prospectuses. The firm has reined in expenses, quietly instituted mandatory retirement at 60 and disbanded an executive committee that previously ran CLSA from Hong Kong, according to current and former employees.

Decisions on hiring, including junior employees, and spending now run through Mr. Zhang, the current and former employees say. Under him, CLSA is becoming more like the state-owned enterprises that dominate much of China's economy: top-down, frugal, politically sensitive and risk-averse.

CLSA declined to comment in detail for this article. In a statement, Mr. Zhang said Mr. Gould had decided to retire. "I would like to express my sincere gratitude to Rick for his significant contribution to CLSA's business and culture, and for the critical role he played in its integration with Citic Securities," Mr. Zhang said.

China's SOEs "are very hierarchical, and that management style conflicts with the more freewheeling management style of many Western corporates," said Andrew Collier, the founder and managing director of Orient Capital Research in Hong Kong. Mr. Collier, the author of books including "China Buys the World," previously worked at a Chinese bank and at CLSA.

The turmoil has cost CLSA some standing with investors: It lost its ranking as the region's top broker for combined research and sales in 2019, in a survey of investors by Asiamoney magazine.

The firm has made some hires to replenish its ranks in research and other areas. And the combined business is a major underwriter of bond and stock offerings, thanks largely to plentiful deals from China.

In the first half of 2020, Citics earned more investment-banking fees in Asia, excluding Japan, than any other bank, according to Dealogic. Recent banner deals include a top role in the $3.9 billion secondary listing in Hong Kong of China's JD.com Inc.

The changes at CLSA dovetail with Hong Kong's gradual transformation from a global financial center and haven for Western corporations into a largely Chinese hub--and echo the city's changing political status. Beijing gave Hong Kong considerable freedom under a "one country, two systems" formula after taking over in 1997, but has recently asserted tighter control. Similarly, Citics had pledged to preserve CLSA's culture and gave it plenty of latitude.

Like many Chinese annual reports, that of Shanghai- and Hong Kong-listed Citics refers repeatedly to the ideology of China's president--" Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era"--and details the Communist Party study sessions of company leaders.

Some political considerations have seeped into life at CLSA. Last year, employees were advised to boycott Cathay Pacific, according to current and former staff, after some employees of Hong Kong's flagship airline angered Beijing by taking part in antigovernment protests.

Mr. Zhang is modestly paid by Western banking standards, earning less than $1 million a year. He inherited the CLSA deal, and has served as a turnaround leader at Citics. China's leaders have also discouraged spendthrift international expansion by Chinese corporations.

The firm that became CLSA was started in 1986 by two former financial journalists, Gary Coull and Jim Walker, who met while working at the South China Morning Post, Hong Kong's most influential English-language newspaper.

For many years, CLSA enjoyed backing from state-backed French bank Crédit Lyonnais, which was later bought by another state lender, Crédit Agricole. Its name is a contraction of Crédit Lyonnais Securities Asia.

The firm focused on stock research and broking, and prided itself on being non-hierarchical and freethinking. Hugh Young, managing director for Asia Pacific at Aberdeen Standard Investments, said CLSA's punchy research, plus its skill at marketing itself, helped it stand out. "It was probably the noisiest voice and the most colorful voice" in the region, he said.

From 1994, it ran annual investor forums in Hong Kong that connected money managers with executives of many companies. These grew to be multiday events, capped with an evening party with performers like James Brown, Elton John and Mariah Carey, while CLSA added conferences in Tokyo, mainland China and elsewhere.

"It came out of a freewheeling Hong Kong of the '80s and '90s," said Mark Clifford, a former editor of the South China Morning Post. "They were a very colorful group of people and their parties were legendary."

In 2009, even as the global financial crisis pressured many international brokerages, CLSA began expanding in America, hiring outspoken bank analyst Mike Mayo and others to produce research on U.S. stocks.

The following year, then-CEO Jonathan Slone told The Wall Street Journal that CLSA was "the insane asylum for people that can't work in the mainstream industry," adding: "People that have only been here for a few days can go to the most senior meetings to discuss their ideas."

Meanwhile, Citics had become China's top brokerage by market value and revenue. Under then-chairman Wang Dongming, a U.S.-educated financier who admired Goldman Sachs Group Inc., Citics struck an abortive cross-investment deal with Bear Stearns Cos. before the latter's near-collapse.

Citics bought 19.9% of CLSA from Crédit Agricole in 2012, and acquired the rest the next year, promising to "maintain the independent perspectives of CLSA's research and its vibrant culture." The deal gave Citics a presence in the U.S., Britain, Australia and across Asia--making it one of the few Chinese securities firms to demonstrate serious international ambitions.

In 2014, CLSA bought a stake in BTIG LLC, a U.S. brokerage. It considered acquiring the firm as part of a broader plan to gain international scale, a person familiar with the matter said.

However, in the summer of 2015, the bursting of a stock-market bubble in China prompted intense regulatory scrutiny of Citics and led to Mr. Wang's retirement, with Mr. Zhang his replacement.

CLSA's U.S. foray subsequently faltered. In February 2017, about half of CLSA's U.S. staff were let go, without the bonuses that would have made up most of their annual compensation. They learned of this in a meeting called at less than an hour's notice, at which Mr. Gould asked them to return to their desks, pack up and leave, some ex-employees said.

Mr. Mayo has an outstanding U.S. arbitration case against CLSA, and has accused the firm of fraud, according to people familiar with the matter.

In Hong Kong, change accelerated in early 2019, following the expiration of a management agreement that was signed at the time of the 2013 acquisition. CLSA's executive committee received no bonuses for 2018, after the firm incurred losses on bonds issued by a troubled Chinese energy conglomerate, people familiar with the matter said.

CLSA Chairman Tang Zhenyi left and was followed soon afterward by Mr. Slone, the CEO. Subsequent departures have included CLSA's chief financial officer, chief operating officer, treasurer and chief legal officer, as well the heads of research, sales and trading, human resources, and communications. Numerous research analysts also exited.

Many former staff including Mr. Slone resurfaced at Jefferies Group in Hong Kong, Sydney and elsewhere. The firm, which is part of U.S.-listed Jefferies Financial Group Inc., hired numerous CLSA analysts including strategist Christopher Wood, author of the widely read "Greed & Fear" newsletter.

Several current and former CLSA employees say change was overdue, and that CLSA's business model, with its reliance on research and equity trading, was outdated. In recent years under Citics, it has expanded in areas like derivatives, bond trading and investment-banking businesses such as mergers and securities underwriting.

Top leaders at Citics are now mostly focused on cementing its No.1 position in China's competitive brokerage industry, said a person familiar with the matter.

In Hong Kong, the events continue, albeit with some changes. CLSA's flagship 2020 forum, which starts Tuesday, was moved from the large and well-located Grand Hyatt hotel to the newer but harder-to-access Rosewood Hong Kong after Mr. Zhang balked at the former's cost, people familiar with the matter said.

Before CLSA publicized the Rosewood event, Mr. Slone's new firm had already unveiled its first Jefferies Asia Forum, to be held in September at the Hyatt. The coronavirus pandemic has undermined that coup, though: both conferences have gone virtual.

Serena Ng and Zhou Wei contributed to this article.

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09-07-20 0620ET