The battle to bank Asia’s next corporate champions

By:
Rob Hartley
Published on:

Having the largest and most successful corporations in Asia as clients brings prestige and profit to the banks involved, but just beneath the very top is where the fight for the spoils of the future is raging. How do you pick – and bank – Asia's next generation of corporate champions?

Asia banking battle

The battle to bank Asia’s next corporate champions is a fierce one. In a world where the income has drained out of many previously lucrative businesses, the bread-and-butter profits that come with corporate banking are more prized than ever. Capturing steady, reliable revenues from the region’s developing companies is both a smart long-term strategy and an opportunity to serve clients across several business areas.

In Asia the competition to bank these firms often starts at a very early stage, but spotting them among the thousands in existence is not always simple. Once a company has become wildly successful, it is hard to imagine that banks would ever have thought of it as anything other than hot property. 

However, for any firm there was commonly a time when banks needed convincing to start a relationship with them. Vikas Jain, business director and co-founder at India’s second largest smartphone company, Micromax Informatics, knows that feeling.
"Of course, the banking relationships are never easy at the start," he tells Euromoney. "It required a lot of persuasion, presentations and meetings on our part, but it was easier once the bankers began to understand our business."
Stephen Bird
  Banking Asia’s corporate champions of tomorrow is a strategic priority for Citi. We have the global network and product set to serve them as they expand both domestically and globally

Stephen Bird, CEO for Citi

In a fast-growing region like Asia, decisions on whether to bank companies like Micromax at this early stage can be vital in developing a long and profitable relationship. And considering the rewards that can result, this is the type of business that everyone wants to win.

Micromax started as a software development company back in 2000. In 2014 it notched up revenue of over $2 billion. The company uses seven banks in total; Jain cites services such as credit lines, trade finance and foreign exchange as important to running the business. Citi is one of the international banks that services Micromax, and Jain stresses the global presence of the bank as valuable, along with the ability to provide feedback when the firm launches in other markets.

"Banking Asia’s corporate champions of tomorrow is a strategic priority for Citi," says Stephen Bird, CEO for Citi in Asia Pacific. "We have the global network and product set to serve them as they expand both domestically and globally. Many of these companies are suppliers to our corporate champion clients, so we also have a good understanding of their business already. 

"We want to ensure these clients are receiving the same access to Citi and the level of coverage that we offer to our corporate champions. We want to partner with the next titans of Asia and support them on their journey of transformation."

Citi is far from alone in this ambition. Bank of America Merrill Lynch, for example, is another international bank that is looking to build a bigger regional presence through its corporate and transaction services business, rather than leading through traditional investment banking services. A similar strategy has long underpinned the ambitions of the likes of HSBC and Standard Chartered. JPMorgan, Barclays and, to some extent, Deutsche Bank are other big international firms seeking deeper relationships with corporate clients in the region.

In the past, much of the competition for banking relationships was focused on the big Asian companies that had already reached multinational status. Such is the level of competition that banking the likes of Samsung, Lenovo or Huawei offers a lot in terms of prestige, but less in terms of profit. 

Now attention is shifting away from the top five companies in countries such as Korea and Taiwan to the next tier: those starting to boost their commercial presence overseas. 

It's not just the big global players that spot an opportunity among this client base. Banks with strong domestic bases and increasing regional ambitions – the likes of ANZ, DBS, CIMB and, no doubt before too long, the big Chinese banks – see a chance to build scale among clients that may be deemed too small for their global competitors. 

On top of that, these are companies that still have long, deep and important relationships with the biggest domestic banks in their home markets. Some of these banks have ambitions to grow internationally with their clients. 

It is yet another story of opportunity in Asia, set against the backdrop of intense competition. So what will it take to be a winner?

Multi-banked corporates

Malaysian exporter Mac World is another company that had to try hard to convince banks of its prospects early in life before becoming the successful multi-banked firm that it is today. Since its inception in 2005, Mac World has been an exporter of a wide range of products, including palm oil and palm products, agri-commodities, chemicals and animal feed. It had a turnover of approximately $350 million in 2014 and has steadily built a presence in markets such as the Middle East, Africa, Europe and India.