Regional Awards for Excellence 2012: Asia

Best Bank: Citi Best Investment Bank: UBS Best Debt House: HSBC Best Equity House: Morgan Stanley Best M&A House: Goldman Sachs Best Flow House: HSBC Best Project Finance House: HSBC Best Cash Management House: Citi Best Risk Adviser: HSBC Outstanding contribution to financial markets in Asia: Nazir Razak, CIMB All regions and countries Asia country awards Full results index

Best Bank

Citi retains its title as the best bank in Asia, beating off stiff competition from perennial rivals Standard Chartered and HSBC. Citi’s leading place comes thanks to the contribution of Asia to overall bank revenues and the bank’s diversified approach to building its regional franchise. Citi’s Asia business, under football-mad Scottish chief executive Stephen Bird, contributed an eye-catching 37% to global net group profits. Citi became the first international bank to receive approval to launch a sole-branded credit card in China, and the number of branches it runs in China has doubled over the past three years to 50. Citi’s diversified business is a strong point in its favour, with 30% of revenues coming from retail, 21% from payment cards, 29% from securities and banking, and 20% from global treasury services.

Citi’s Asia business, under chief executive Stephen Bird, contributed an eye-catching 37% to global net group profits

As the bank celebrates its 200th anniversary, Bird says the pressure is on for the group as a whole to perform strongly and Asia is no exception to this. The cash management business remains a market leader and the Citi Velocity electronic trading platform has led to rapid growth in the Asian flow business –up 15% year on year in client volumes.

Citi’s investment bank, under Farhan Faruqui, might not be quite the finished article as far as league table positions are concerned but has shown stellar progress and will expect to be a strong contender for next year’s best investment bank award. Rival bankers this year increasingly mentioned Citi alongside such firms as Goldman Sachs, Morgan Stanley and UBS when talking about the competitive landscape for investment banks in Asia. Citi advised on some of the leading Asian deals of the year, including the Sun Art IPO and the financing for Vedanta Resources. It also carried out landmark dim sum bond issuance for companies including Ford and Caterpillar.

Citi’s closest competition for the best bank award came from Standard Chartered. Amid challenging market conditions, it grew profits by 10%, with the bulk of that growth coming from Asia, which is still considered by the bank to be its home region. Standard Chartered continues to play a central role in the internationalization of the renminbi. Its Hong Kong operations, in particular, had an outstanding year, with profits up 41% to more than $1.5 billion on the same period a year earlier. Mainland China profits doubled to more than $220 million.

HSBC’s strong performance in Asia is demonstrated by its awards in several of the regional categories, but it lacks the spread or scale in retail banking across Asia that Citi and Standard Chartered deliver.

Best Investment Bank

Investment banks across Asia struggled this year to cope with volatile market conditions that kept the equity capital markets quiet, particularly for initial public offerings. The ECM business has traditionally been the bedrock of the investment banking franchise for Asian players. Those IPOs that did come to market invariably did so with a whimper and many were pulled on the verge of launch. The fight for best investment bank in Asia remains a close one, with Goldman Sachs, Morgan Stanley and UBS all offering compelling reasons why they should take the top spot.

UBS wins this year as a result of its powerful presence in two of the most important markets – China and Australia – and its involvement in many of the largest deals across asset classes and geographies. Its performance in outbound completed M&A deals for China and completed deals for Australia – it topped the tables in both cases – clinched the award for UBS this year. In Australia, UBS advised on six of the top-10 deals by deal value during the review period and completed over a third more volume than Goldman Sachs, its nearest competitor, although it was behind Goldman and Macquarie in terms of the number of Australian deals it advised on. In China, UBS garnered more than 28% of market share in M&A.

In debt capital markets, UBS was among the leaders for high yield, with deals such as Citic Pacific’s $1.1 billion bond offering and Shui On Land’s $475 million deal. It also helped open the hybrid market, with deals including the first-ever international corporate hybrid from India for Tata Power.

Best Equity House

Although the equity markets remained choppy, UBS was once again ranked top in the important Chinese and Australian markets. Morgan Stanley, last year’s winner of best investment bank in Asia, remains a fierce competitor and an argument almost as compelling as that for UBS could be made for it retaining its title this year. Particularly in the important equity market, Morgan Stanley remains the market leader in its inclusion as a lead or global coordinator on the largest IPOs and its ability to execute in the secondary market. Goldman Sachs also remains a formidable force in Asia, its M&A franchise in particular flourishing over the awards period.

Morgan Stanley acted as global coordinator or lead bookrunner on many of the largest equity capital markets deals that came out of Asia in a difficult time for ECM in the region and worldwide. With post-IPO performance difficult to come by, it was noteworthy that the bank outperformed its peers in after-market performance. Morgan Stanley’s deals included ONGC’s $2.6 billion sell-down by the government of India – the largest Indian deal of the awards period. It also acted on AIA group’s $6 billion sell-down by AIG and Samsonite’s $1.3 billion IPO, the largest consumer and retail IPO in Hong Kong since 2007 at the time of listing.

The ECM awards category is a particularly difficult one to judge given the sheer number of bookrunners present on many of the largest deals in Asia in recent months. Many of these essentially passive bookrunners claim league table credit and this clouds the results, making it important to examine who did what on deals to gain a fairer representation of the real pecking order.

Morgan Stanley’s close relationship with Temasek resulted in its role as sole bookrunner on the $3.6 billion concurrent sell-down of CCB and BOC by the Singapore government’s investment company. More recently Facebook’s fluffed IPO on Nasdaq in the US might have dented Morgan Stanley’s reputation for smooth execution in equity capital markets, although many observers pointed out that the glitches appeared to stem from the exchange rather than any underlying problems with the stock.

Pulled offerings such as that of Graff Diamonds and the postponement of Formula One’s Singapore listing are testament to the skittish nature of markets in the region.

As in most businesses across Asia, competition in ECM is fierce. UBS and Goldman Sachs, Credit Suisse, Bank of America Merrill Lynch and Deutsche Bank continue to make the most of challenging market conditions. All will be hoping for an easier capital-raising environment in the coming year, although as the eurozone crisis continues to dampen market sentiment, they might be waiting some time for an extended period of market stability.

Best Debt House

HSBC retains its place as the leading player in debt capital markets across Asia, with a breadth of franchise that its rivals struggle to match. The sheer scale of its operation makes it difficult to look beyond it for the top debt award in the region. It provided more than $43 billion in debt funding to clients in Asia – up more than a fifth year on year. It retained its leading position in G3 bonds, Asian local-currency bonds and the loan market. In corporate and quasi-sovereign issuance, deals included the 10-year and 30-year issue by Pertamina, one of the most prominent Asian bond issues in recent times. HSBC also shepherded KNOC to a market reopening issue in October. The bank was at the forefront of developments in the Asian local-currency market. Perhaps the year’s most notable trade was China’s Rmb20 billion ($3.14 billion), five-tranche CNH offering in Hong Kong.

Stephen Williams, head of global capital markets at HSBC, points out that his bank’s deals in the corporate hybrid business were perhaps its proudest achievement of the past year. The bank helped both ICBC Asia and ICICI UK with important capital raisings ahead of the Basle Committee’s pronouncements on tier 2 instruments, and subsequently delivered Philippine bank BDO Unibank’s P8.5 billion ($201 million) tier 2 notes in June 2011, one of the largest tier 2 issues by a bank under the new Basle III regulations.

Competition for HSBC in the debt markets comes from several banks, including JPMorgan, which enjoyed a year of stellar progress. In all G3 issuance, JPMorgan came a close second to HSBC over the awards period, with a combined deal value of $17.9 billion, compared with $18.2 billion for HSBC. Citi was the closest rival to HSBC and JPMorgan in the debt business and worked on some of the year’s defining deals, including Commonwealth Bank of Australia’s $54 billion senior and covered notes as a joint bookrunner, and as sole global coordinator on Siam Commercial Bank’s $600 million notes. Generally the DCM business was far healthier than the moribund equity scene, with a steady flow of smaller deals keeping bankers in the region busy throughout the year.

Best M&A House

Goldman Sachs takes the spoils in M&A after another good year in which it acted as sell-side adviser on the largest Asia oil-and-gas M&A transaction, BHP Billiton’s $15 billion acquisition of Petrohawk Energy, and SABMiller’s $13 billion acquisition of Foster’s Group.

Goldman advised on five of the top-10 completed deals across a range of industries and took a market share of 17% by deal value, according to Dealogic. Other deal highlights for Goldman included the largest-ever single-asset real estate transaction in Asia: Mapletree Investment’s $2.4 billion purchase of Festival Walk from Swire Properties in July 2011. The US bank that has been in the news this year many times for the wrong reasons also served as sell-side adviser on the largest Japanese M&A deal of 2011: Takeda Pharmaceutical’s $13.7 billion acquisition of Nycomed in May. Outbound M&A from China was one of the themes of the year and Goldman was an active participant, serving as buy-side adviser on CNOOC and Total SA’s combined $2.9 billion acquisition of Tullow Oil’s Ugandan assets.

Goldman’s closest competition in M&A came from JPMorgan, which took a 14% market share by deal value followed by Bank of America Merrill Lynch, with a 12% share, and Morgan Stanley, with just under 12%. Goldman was slightly ahead of Morgan Stanley in the number of deals advised on: 98 compared with 93. In a competition on the number of deals advised on in Asia Pacific, Nomura is always going to win. This year, the Japanese bank advised on 152 deals but still managed a market share of just under 8%. The strong performance of UBS in China and Australia helped it to fifth place in the league tables and last year’s winner of the Asia M&A award remains a force to be reckoned with on the very largest M&A transactions in the region, particularly in the important mining and natural resources sectors.

Best Flow House

HSBC retains its position as best flow house in Asia following its win last year in the inaugural award in the category. This is testament to the continuing strength of its platform across the board. The bank’s presence in Asia makes it the go-to bank for the growing number of institutions, funds, corporates, family offices and insurers that are investing in the region. Its balance-sheet strength is an undoubted advantage in this respect, as is its ability to recycle risks given the size of its client base. The bank says it is ideally placed to take advantage of the gradual shift of global economic power from west to east and increasing international trade flows from north to south.

In Asia, HSBC demonstrates strength across many of the key areas taken into consideration for the flow house award: foreign exchange, rates, commodities, credit and equities and renminbi internationalization. In rates, for example, the bank’s local presence gives it local market flows, insights into the strategies of local regulators and intelligence on underlying products. Last year the rates business grew 164 % in total sales turnover and over the same period the client base expanded from 992 to 1,127.

In foreign exchange, the bank made further progress in electronic trading, with e-trading now constituting close to 30% of FX sales. Turnover on electronic trading went up 90% in the past year. Prime services for Asia was launched in July last year, deepening the firm’s contact with hedge fund clients. HSBC’s growing strength in areas such as commodities, where its business grew 40% in sales volume over the past year, cements its position at the top of the pile.

Best Risk Advisor

Risk management has become a vital part of the business of finance since the excesses of the pre-financial-crisis world were so brutally and damagingly revealed. HSBC emerges as the top risk management house this year, beating off stiff competition from Deutsche Bank and a surging Barclays. HSBC’s win recognizes the bank’s ability to provide unique hedging solutions to clients from the simple to the fiercely complex.

These solutions span the range of HSBC’s franchise in the region, from structured equity financing to M&A and all areas in between. Examples of the breadth and varied nature of its hedging and risk management solutions are plentiful. In Korea over the past year the bank has begun offering customized derivative products in the form of a low-barrier auto-callable pay-off option on the Kospi (Korea’s stock index).

In Malaysia a client was looking for long-term funding at the most efficient pricing, leading HSBC to propose a long-dated 10-year transaction with limited liquidity in the form of a swap where the client could minimize disruption to the market and achieve the target hedge rate. The bank also remains among the leaders in the CNH market, acting as a manager and hedge provider for América Móvil – the first Latin American issuer in the offshore renminbi market.

Last year’s risk management winner, Deutsche Bank, continues to show impressive risk management and advisory capabilities across the Asian platform. It responded this year to a number of the key themes in the market, such as an increased need for hybrid hedging solutions, cross-border solutions and accounting-friendly ways of reducing costs.

Citi regains the award for cash management this year from Standard Chartered thanks to another year of innovation in transaction services, a business that is increasingly crucial to the fortunes of banks in the region and across the world. Citi provides cash services in a market-leading 18 countries. In Asia Pacific the bank won $159 million worth of new client business, up a healthy 35% year on year. Citi’s revenue in the region is up 11% and net income at the end of the first quarter this year is up an impressive 15% over the same period last year and more than $200 million ahead of the fourth quarter last year. Citi was the leading clearer among foreign banks in nearly all countries across the region, processing more than 122.4 million local Asia Pacific payments. The bank is also at the forefront of technological innovation. Many of its enhancements are designed to give clients greater control and visibility and help them manage risks more easily and effectively.

As part of these efforts, mobile collections have now launched in China and India, following a successful pilot programme in Korea. Citi is the first international bank to receive approval and launch a credit card business in China, an important development that sets it apart from the competition this year.

The challenge to Citi’s top spot comes primarily, once again, from Standard Chartered, which has made particular progress with its pilot programme to implement an automated foreign exchange solution for inward cross-border collections that should give treasurers improved control over their foreign-currency receipts. With Standard Chartered snapping at its heels, Citi cannot afford to relax and must continue to innovate if it is to retain its title next year.

Best Project Finance House

Project finance across Asia continued to be vibrant this year. HSBC takes the top spot, retaining the title it reclaimed from Société Générale last year. The bank has been instrumental in driving a number of landmark deals as adviser. The project finance team closed 15 deals, raising more than $14 billion across eight countries in Asia Pacific, again demonstrating its breadth of franchise. This is up from last year, when the bank closed 12 deals, raising more than $10 billion over the same period.

The bank has 22 live mandates across Asia (13 advisory and nine arranging mandates) with project volumes of more than $50 billion across nine Asia Pacific countries. Among the most notable deals closed over the past year were the Royal Adelaide Hospital, Australia, on which HSBC acted as mandated lead arranger, hedge provider, hedging execution bank and equity investor for the A$2.5 billion ($2.51 billion) debt facility. It also served as sole coordinating bank, among other roles, on the landmark deal for Tanjung Bin Energy’s supercritical coal-fired power plant in Johor, Malaysia. HSBC’s close relationships with local export credit agencies continue to help its cause across the region.