Awards for Excellence 2016
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Also shortlisted: |
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Bank of America Merrill Lynch |
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Citi |
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Morgan Stanley |
Sometimes size really does matter, and when it comes to corporates, HSBC has plenty of it. The bank serves over 2 million small and medium firms around the world. On top of that it has about 54,000 complex international clients, of which some 7,500 it designates as large corporates. For this last group it has dedicated coverage teams with a global relationship banker as the single point of contact.
As a large and complex bank, HSBC has been subject to the same regulatory pressures as its global peers. But it is more localised than many, with in-country operations that typically have their own balance sheets rather than operating via a branch-based model.
“There is no doubt we have benefited from a flight to quality,” says Philippe Henry, global head of corporates, financials and multinationals in the global banking and markets division. “Corporates are increasingly careful with fees, which means that in order to attract event-driven or flow business, we must provide an excellent service. We must understand not only the needs of clients, but also the needs of the clients of clients, and support the ecosystem they are part of.”
Whether evidenced through nuts-and-bolts services like cash management and trade finance, loan and bond debt financing, and increasingly in equity and advisory, the bank’s corporate offering remains the foundation for much of its business.
Its local presence can give it an edge in terms of efficiency, helpful when coping with today’s regulatory burdens. Long-term currency swaps are more expensive than they once were, but an existing relationship with a client’s local operations can mean the ability to swap just the net, rather than the gross, exposure. It also means that the bank is able, for instance, to swap a Thai client’s euro borrowing into baht to match the borrower’s cash flow.
Nowhere is the bank’s breadth better demonstrated than in its work for CK Hutchison. It banks the group in 32 countries, deploys its payments business for the client in 30, trade finance in 17. More than 200 bankers cover the group. The scale of the relationship helped HSBC win a lucrative sole financial adviser role for the group’s $81 billion reorganization last year. It then committed the bulk of the loan financing, before bookrunning the group’s first bond issue after that: a €2 billion deal in April 2016.
As overwhelming as that mandate was, the bank is equally proud of business on a different scale, such as its work during the period under review for Enel Green Power (EGP), a subsidiary of Italian energy group Enel, with whom the bank has had a relationship since entering the Italian market in 1995.
In August 2015, HSBC was picked as sole mandated lead arranger for EGP’s €145 million covered financing facility, the borrower’s first export credit financing with Italian export agency SACE. The deal financed four photovoltaic power projects in South Africa and showcased not only the bank’s credentials in green finance but also its cross-border expertise.
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Philippe Henry, HSBC |
The bank followed up with a financial advisory mandate for EGP’s acquisition of BLP Energy in India, the company’s first foray into the Asia-Pacific region. For HSBC, the breadth of its corporate offering is a crucial component of its broader push into strategic areas of investment banking such as equity capital markets and advisory. For several years it has made great play of the closer coordination between its global banking and markets franchise and its commercial banking division – its ‘collaboration’ approach.
When that push began in earnest, some of the earliest results were seen in the bank’s increasing profile in high-yield debt. Now that has spread into broader corporate finance and advisory – and in dramatic fashion. It’s worth remembering, for instance, that ChemChina – for whom the bank acted as sole adviser on its $43 billion recommended takeover of Syngenta – started out as a commercial banking client of the bank. Fifteen years ago, the typical large client was buying just three products from HSBC; now it is more likely to be in the region of seven.
The result of this strategy has been to transform what was already a world-class corporate banking franchise into something that is able to support the strategic ambitions of some of the biggest companies in the world. The fact that HSBC is also our pick this year for the world’s best investment bank is a testament to the underpinning provided by the work it continues to do for corporates.
