Asia
Best bank: HSBC
Highly commended: Citigroup
Best securities firm: Merrill Lynch
Highly commended: Jardine Fleming
Best at transaction services: HSBC
Best at treasury: HSBC
Best at trade finance: HSBC
Best local debt underwriting: HSBC
Best equity brokerage: Warburg Dillon Read
Best at cross-border capital raising: Citigroup
Best M&A firm: ING Barings
For the third year running HSBC wins the best bank in Asia award. In the past this has been a battle-royal between Citi and HSBC – this year was no different. Although HSBC has had to face up to high levels of provisioning, Citibank also lost ground, because clients have been carefully watching how its integration with Travelers is going. Some complained that Citi staff were leaving because of uncertainties created by the merger.
HSBC’s cautious provisioning, however, was in line with its characteristic Scottish conservatism and it appears likely that it will be written back over the long term. A propitious aspect of the provisioning is that it indicates that HSBC is the most solidly established and broadly based international bank in Asia – it doesn’t just lend to top-tier multinationals; clients know it will be there in good times and bad.
HSBC’s profits in Asia before provisions were $3.9 billion – only 1% down on 1997. After provisions, however, they were $1.39 billion, down 45%. But with $150 billion of deposits (up 9% as a result of a flight to quality) and a loan book of $91 billion, there is still no bank with a greater Asian presence.
The bank’s competitive position in Asia is constantly under threat, and it has been actively looking at acquisitions. It will take its biggest gamble for some years if it succeeds in buying Seoul Bank in Korea (it is now negotiating over price with the Korean government). On the one hand it would make it a player of the first order in Korea. On the other, it would involve unprecedented cultural assimilation. It would involve overturning ingrained Korean lending practices and teaching staff the fundamentals of Anglo-Saxon banking standards. The benefits probably outweigh the risks. If the deal falls through it will be a pity.
In line with the trend set by competitors such as DBS of Singapore, ABN Amro and Standard Chartered to make acquisitions across Asia, HSBC is looking at opportunities to buy local banks in Indonesia, the Philippines and Thailand. Thailand is an area of particular interest given that HSBC was the first bank of any kind to be set up there, but is by no means the dominant player today. Acquisitions in Malaysia and Singapore would be superfluous since HSBC is already very active in these countries.
Above all, HSBC is well positioned in the two most populous countries in Asia: China and India. China has always been a top priority, and whenever a new business line has been opened up to foreigners, such as local currency banking in Shanghai, HSBC has been among the first into it. Now the Indian operation seems to be getting its act together too.
There is a greater edge to the HSBC group today. Most of the complacency has been shaken out and the notion of cross-selling is finally catching on. Giving Stuart Gulliver total control over the treasury area in 1994 is likely to be remembered as one of the best organizational decisions to be taken in recent years by HSBC. Under his stewardship, HSBC’s forex operations have been taken to the top of all the polls and its bond market presence has been boosted.
That decision was a break for the bank because of its impact on the absolute power held by country heads in Asia – an organizational structure that reaches back to the 19th century. Gulliver, as a central product head, works with country bosses, but has ultimate power over bonus allocations and hire-and-fire decisions.
The bank is also keenly aware of the need to keep up with new technologies as is the Asian market as a whole. HSBC’s latest e-commerce solution set up in collaboration with Compaq is particularly innovative. This cash management product – launched initially in Hong Kong – will enable internet-based businesses to bill clients with absolute security via a secure HSBC server where credit card transactions are processed and the customer gets card-authorization information from the card issuer. The system will also allow payment via transfers from HSBC bank accounts.
Merrill Lynch emerges as this year’s best securities firm in Asia, just ahead of Jardine Fleming. This time last year it was widely seen as the firm to watch, moving fast on every front. But it outran its resources, which is why it didn’t sweep up the 1999 awards unopposed. Although it consolidated its new British-style broking business (labeled British because it keeps research and sales in-country as opposed to the US style of broking out of a hub with sectoral research), it lost ground in fixed income. Market professionals wondered what had happened to the strongest cross-border bond force in Asia. The fallout from the Long-Term Capital Management and Russian crises meant the old Merrill team lost some of its members, bonus pools dried up and a rebuilding process was required.
Nevertheless, the deals have once again begun to flow. They include a 10-year global for Hong Kong’s Mass Transit Railway, a 10-year global for China Development Bank and a $575 million mortgage-backed issue for Harbour City Funding, a subsidiary of powerful Hong Kong conglomerate Wharf.
In equities Merrill Lynch has been involved in deals including a $31 million block trade for Singapore property company Hotel Properties and, at the other end of the scale, the $345 million privatization of the world’s biggest steel producer, Posco. There was also a $187 million block trade for SmarTone of Hong Kong and a $66.4 million accelerated tender offer for China Merchants – the first in Asia. This was followed by the $407 million accelerated tender offer for PT Telkom of Indonesia. A $404 million ADR was done for Asia Pulp and Paper of Thailand.
Merrill Lynch had a strongish year in pure Asian M&A and advisory. It was particularly strong in Korea, advising Hyundai Electronics in its acquisition of LG Semicon, and Kookmin bank on its sale of 20% to Goldman Sachs. It also advised SK Corp when it formed a 50/50 gas joint venture with Enron.
Merrill Lynch, Warburg Dillon Read, Jardine Fleming and, to a lesser extent, Crédit Lyonnais Securities dominate the Asian equity brokerage business. Merrill has 93 research professionals around Asia. It has been building this infrastructure for nearly three years and its breadth makes it the exception among the US houses – which tend to prefer the less costly Hong Kong and Singapore sectoral approach.
Transaction services incorporates both cash management and custody. The latter is one of HSBC’s clear strengths in Asia. It is the number one sub-custodian in Asia according to Global Custodian magazine, with $120 billion of assets under custody in the region. Such is HSBC’s domination that to take one example, in Indonesia it has 45% of foreign-invested assets under its custody.
An official of one of world’s biggest global custodians notes that HSBC “knows the markets well and has the presence. It has also hired people from the global custodians so they know the issues we face. So we don’t need to invest a lot of our time talking them through issues. They know what the issues are and anticipate them”.
Cash management is one of the most competitive, most contentious, least transparent areas of banking in Asia. The market breaks down into low-end cash management (for medium-size Asian corporates) and high-end management (for picky multinationals), with many institutions choosing to target one or the other. Only HSBC hits both areas and although rivals carp about it – judgements we heard included the claims that “it doesn’t have the products”; “all it does is use its balance sheet”; and that “it’s technologically backward”.
Clients, though, are enthusiastic. One US client uses HSBC in 11 countries and says he uses US banks in other territories but believes HSBC is best in Asia. He adds: “HSBC are not at all well known in the US and I took a bit of a risk mandating them. No-one gets fired for hiring Chase, Citi or Bank of America. But I did a lot of research and I felt HSBC would be the best for us.”
HSBC won 2,263 cash-management mandates in the period covered by our awards, with 118 of a regional variety. The rest were single in-country solutions, and admittedly 912 were in Hong Kong. HSBC has over 11,000 electronic banking customers in Asia.
HSBC is the most important player in Asian trade finance by quite a stretch. When others were pulling back it was opening new facilities in 1998. It offers trade services in 21 countries in the region, and according to Swift statistics has the number-one market share.
HSBC Markets is also a dominant player in the local debt markets. It has been active in placing bonds in India, Singapore and Malaysia. The cornerstone of its business is probably also the most sophisticated market, Hong Kong, where outstandings total 30.7% of GDP at $51 billion. HSBC has led HK$34.6 billion ($4.4 billion) since July 1998 in 189 issues. It has raised $1 billion in other Asian currencies including the Bt3 billion ($77 million) debenture for Export Import Bank of Thailand. It is even on the dealer list for Islamic bonds in Malaysia.
In Hong Kong its high-profile deals include one for the Asian Development Bank (HK$3 billion), and in Singapore it launched the European Bank for Reconstruction & Development’s first Singapore dollar deal in conjunction with a Hong Kong dollar deal.
Warburg Dillon Read is the momentum player among Asian equity brokerages. Although Merrill Lynch had clearly occupied this role last year, WDR has moved into it. It was ranked second in Institutional Investor‘s research analysts poll, and the expectation is that it will continue to move up. It has broad coverage across Asia, and an on-the-ground presence in each market. The merger with UBS has boosted coverage in several countries including Malaysia. It is among the top three in almost every market.
Citigroup almost uniquely has all the bases covered for a company’s cross-border capital raising needs. Its syndicated loans team topped the league tables for Asian credits in 1998, arranging loans worth $6.5 billion. Last year syndicated loans accounted for $84.49 billion of a total $128.98 billion of funding for Asian companies, far outstripping equity and equity linked ($12.85 billion) and straight bonds ($13.81 billion). If Citibank has the still critical loans side covered, Salomon Smith Barney played a dominant role in bond issuance, with key deals including the $500 million issue for the China Development Bank. In equities SSB was very active. Of particular note was the sole-led deal for Siam Commercial Bank which raised $1.75 billion – the largest Thai equity offering ever. In Korea it followed up on its successful $4 billion government bond issue with equity deals for power company Kepco ($753 million) and Pohang Iron & Steel ($345 million).
ING Barings wins our award for best M&A advisor in Asia not only for the number and value of deals completed – 19 closed deals worth $4.3 billion in the year since July 1998 – but also because of the repeat business the firm has done. With the possible exception of Jardine Fleming, no-one else has such a good track record in this respect. Repeat clients include the Gokongwei family of the Philippines, First Pacific and Procter & Gamble – for which another deal is pending. An excellent year for ING Barings in a market which US investment banks are beginning to dominate. Steven Irvine
China
Best bank: Bank of China
Best securities firm: J&A
Best bank: HSBC
Best foreign securities firm: CLSA
It is difficult to choose the best bank in China, and it’s not because they are all so good. Bank of China remains the state’s flagship bank and is thereby probably the securest. Its extensive Hong Kong operations also give it a centre of excellence from which to import skills and credit techniques – at least that must be the hope of China’s prime minister Zhu Rongji.
Recently merged with Guotai, the new J&A has assets of Rmb3.4 billion ($415 million), well above Shanghai’s Shenyin &Wanguo Securities Co, the former number one, which has assets of Rmb2.4 billion.
But being the biggest bank in the country and the most profitable is not always an advantage for a Chinese bank. In times of overheating it is the biggest firms that have fines and charges slapped on them as a lesson to others. Shenyin faced just such a situation earlier this year as a result of an IPO it did for a Dongfan company in 1996.
With 134 years of experience in China, HSBC now has eight branches plus three representative offices, and 800 staff. It is the top sub-custodian in China according to Global Custodian magazine, holding 50% of the foreign-owned securities under custody. It has the largest dealing room of any foreign bank and is a participant in the local government bond and repo market.
With the best China research, CLSA Global Emerging Markets helps to make the sometimes incomprehensible Chinese B share market a little more comprehensible.
Hong Kong
Best bank: HSBC
Best securities firm: Goldman Sachs
The fact that Goldman Sachs retains its enormous market share in virtually every business is a triumph of excellence over complacency. Closely associated with the attacks on the Hong Kong market last August – forcing the government to buy $10 billion of stocks – Goldman was then selected to sell those stocks back to the market (with Jardine Fleming and ING Barings), as an advisor to the fund charged with offloading the government’s holding.
Also advising on the merger of the stock exchange and the futures exchange, and joint books on a bond issue for MTR, Goldman’s Gucci-style brand has carried it through a difficult year in Hong Kong.
India
Best bank: HDFC Bank
Best securities firm: DSP Merrill Lynch
Best foreign bank: HSBC
HDFC Bank is the best private bank in India. With its parent, the HDFC Group (which owns 30% and is India’s dominant mortgage lender), it is a strong and growing presence run by Aditya Puri, Citibank’s former Kuala Lumpur head. HDFC Bank has a return on equity of 26% and a return on assets of 2.5%. It is strong in the corporate banking arena and is the clearing bank for all India’s stock exchanges. On the retail side, it has just surpassed HSBC as the biggest issuer of ATM cards with over 300,000 now issued.
With an estimated market share of 12.8% among foreign institutional investors, DSP Merrill Lynch has consolidated its position as India’s top house. Dominant in debt-raising, it has also grown its M&A business, for example advising Lafarge on its $129 million cement acquisition from TISCO.
Even if it hadn’t been for the sanctions against US companies in India, a more aggressive HSBC would probably have started to win back market share from the US banks. “They are very clear about what they can deliver and what they can’t,” notes a top client of the bank. “They don’t give promises they can’t keep.” He adds that the bank has the quickest response time among banks.
HSBC has the biggest deposit base of foreign banks, and grew its loan book 26% last year to take advantage of opportunities and its historical underleveraging. According to one client, it is the only bank in India to offer electronic funds transfers.
Indonesia
Best bank: not awarded
Best foreign bank: ABN Amro
Best foreign securities firm: Jardine Fleming
With its 13 branches in eight cities, ABN Amro – perhaps for historical reasons – has the biggest presence in Indonesia. It has increased its staff by 30% – growing rather than contracting – and extended new facilities to 40 Indonesian corporates.
Employing 71 people, Jardine Fleming is the number one brokerage house in Indonesia with a market turnover of close to $1 billion. It advised the Danone Group on a 40% interest in the Aqua Group and Heinz on the acquisition of PT ABC Foods; it also advised the government on its sale of cement company Semen Gresik.
Japan
Best domestic bank: Bank of Tokyo-Mitsubishi
Best foreign bank: Citigroup
Best securities firm: Nomura
Best foreign securities firm: Merrill Lynch
All of Japan’s banks are in pretty poor shape. Bank of Tokyo-Mitsubishi is the last of Japan’s global banks and also its biggest, and is arguably too big to fail. Moreover Japanese banks average only ¥700 billion ($5.9 billion) of earnings power. BoTM has ¥1trillion, which means that it can invest.
It says a lot that in Nikkei’s annual December survey in 1998, Citigroup had pushed Bank of Tokyo Mitsubishi off the top spot. It ranked highest in terms of safety, products, and potential. It is also clear that corporate Japan feels the same way too. Japanese bankers were left to weep into their sake when Citi was awarded the $5 billion syndication for Japan Tobacco. What happened to the house bank concept? Not dead, but nevertheless Citi is making inroads.
Nomura is still the biggest Japanese firm, and probably the only one that will be able to resuscitate itself and its pride in the face of the foreign onslaught.
The takeover of Yamaichi is obviously not without its cultural problems for Merrill Lynch, but it is a sign of the commitment of the US house to the Japanese market. It is truly part of the domestic market. When Orix wanted to launch a ¥30 billion retail targeted bond in March, Merrill took 8% of the deal to sell through its branch network. Merrill Lynch Mercury Asset Management increased its assets under management from $9.7 billion at the end of 1997 to $17.9 billion at the end of 1998. The separate Merrill Lynch Japan (incorporating the old Yamaichi) is forecast to have ¥1 trillion under management by the end of the year, and is seeing a growth in assets under management of ¥5 billion a day. Merrill was involved in $16.5 billion of Japanese M&A in the first quarter of 1999 – including the Renault/Nissan and Japan Tobacco/RJ Reynolds deals.
Korea
Best bank: Housing & Commercial Bank
Best domestic securities firm: Samsung Securities
Best foreign securities firm: Merrill Lynch
Best foreign bank: Citigroup
Housing & Commercial Bank stands out by a considerable margin as the top bank in Korea. It has the smallest chaebol exposure of any bank, and is run by a surprisingly shareholder-driven management. Some 65% of its shares are owned by non-Koreans.
Though not as big as rival chaebol brokers Hyundai and Daewoo Securities, Samsung Securities is reckoned to have made the greatest strides in the past year. Having doubled its market share to 8%, it is very aggressive in internet trading, and in the fee-based beneficiary certificate business (rather like mutual funds). Its head of research, Namu Rhee, used to run Peregrine’s successful Korean research operation.
Merrill Lynch has a strong brokerage platform but what really sets it apart from such rivals as Jardine Fleming is its strength in primary markets and advisory. Merrill is advising Hyundai Electronics in its acquisition of LG Semicon (estimated value: $5 billion). It is also the adviser to Kookmin Bank in the sale of a $500 million stake to Goldman Sachs. It led the $345 million privatization of steelmaker Posco and the $400 million GDR for Shinhan Bank.
Citigroup has the largest branch network, with 11 branches in two cities, and is the most profitable foreign bank. Key transactions include the first private debt restructuring deal in Korea for Interbrew. However, a new competitive climate may arise if HSBC goes ahead with its acquisition of Seoul Bank.
Malaysia
Best bank: Public Bank
Best domestic securities firm: Rashid Hussain Securities
Best foreign securities firm: Jardine Fleming
Best foreign bank: Citigroup
The most conservative bank in Malaysia with the most conservative client base, Public Bank has traditionally had the lowest NPLs in the banking sector.
This is the seventh year in a row that Rashid Hussain Securities has won the award for best domestic securities firm. There is no other Malaysian firm that brokers to international standards or produces as good research.
With prime minister Mahathir Mohamad’s decision to impose capital controls last year, many foreign brokers decided to cut back their operations in Malaysia. Jardine Fleming maintained its nine staff and increased its market share. It was involved in the M$600 million (US$142 million) swap that enabled Blue Circle to acquire Kedah Cement.
Although Citigroup has assets of only $3.5 billion in Malaysia, compared with HSBC’s $6.1 billion, it has by far the best return on assets at 2.57% and a return on equity of 29.94%. However, HSBC has provisioned severely in Malaysia. With the recovery it may be able to write back these provisions.
Philippines
Best bank: Bank of the Philippine Islands
Best local securities firm: Abacus
Best foreign bank: ING Barings
Best foreign securities firm: Jardine Fleming
The best run of Philippine banks, Bank of the Philippine Islands has the cleanest balance sheet, and is the favoured choice of analysts. It remains to be seen how the merger between Philippine Commercial International Bank and Equitable Banking Corp will work out, but the likelihood is it will provoke further consolidation – and possible acquisitions by foreign players such as HSBC which is known to be actively looking.
Foreigners have more than enough choice in the Philippines. Abacus targets the local, especially the retail investor,and is the most efficiently run local broker in a notoriously fragmented industry. It has about 2.5% market share, the biggest among the locals.
In a difficult year, ING Barings‘ profit per employee rose from $236,000 to $274,000. Run by Bing de Guzman, this is probably ING’s best banking franchise in Asia. Only 10 years old, it is the second biggest foreign bank in the Philippines by assets, and last year grew assets by 30% to cement relationships among top corporates.
The largest brokerage firm in the Philippines, Jardine Fleming accounted for just under 8% of market turnover in the past year and is run by the enigmatic Conrado Bate. The corporate finance effort is headed by the well connected Luis Verata. Deal flow has been large and has included JF’s advice on Cemex’s $400 million acquisition of Philippine company Apo Cement.
Singapore
Best bank: DBS
Best foreign bank: Citigroup
Best securities firm: Merrill Lynch
The biggest bank in Singapore and the government champion, DBS continues to be the favourite among analysts. In the past year it has pushed itself into a regional banking role with acquisitions in Hong Kong, the Philippines and Thailand.
One of it’s parent’s two regional hubs,
Citigroup in Singapore was appointed by the Monetary Authority of Singapore as the sole settlement bank for the US dollar clearing system in Singapore. With 218 positions, Citi’s treasury dominates in Singapore with an 11% for interbank and 9% for corporates.
Citi has also been instrumental in developing the Singapore bond market. For example, in November 1998 it arranged the inaugural S$4 billion (US$2.3 billion) MTN programme for Jurong Town Corporation. It was the lead manager of the first tranche of bonds – S$300 million of seven-year fixed-rate paper.
Citi enjoys the benefits of being seen as neutral in Singapore’s battle for regional supremacy with Hong Kong. Not so HSBC.
The most powerful presence in Singapore, covering 69% of Singapore-listed companies with its research, Merrill Lynch inherited the strong Smith New Court franchise and has built on this platform. It was the adviser to the Singapore government on the demutualization and merger of the Singapore stock exchange and the Singapore International Monetary Exchange (Simex).
Taiwan
Best bank: Sinopac
Best securities firm: Capital
Best foreign bank: Citigroup
Best foreign securities firm: ABN Amro
Sinopac is a very conservative, well-run, bank. Non-performing loans are below 1% compared with the rest of the sector where they number between 2% and 8%. It is reinvesting income to build long-term businesses. Foreigners own 30% of the bank. The biggest problem on the horizon is baggage related to its acquisition in California – which it has emerged, helped finance the Peoples Republic of China’s spying efforts in the US. At least with a Taiwanese owner, this is guaranteed not to be repeated.
The preferred choice among foreigners. Capital has consistently won the best foreign securities firm award.
Citigroup‘s pre-tax earnings in Taiwan amounted to NT$4.30 billion (US$132 million) in 1998 – more than the total earnings of all the other foreign banks in Taiwan combined.
Run by top salesman Nathan Emerson, with corporate finance rainmaking from Ronald Song, ABN Amro is the top foreign securities house in Taiwan.
Having lost only one salesperson from a 10-person desk in four years it is seen as the firm to work for. It recently hired James Carroll from Merrill Lynch to head research, replacing Jonathan Ross who will cover global electronics from San Francisco.
Thailand
Best bank: Thai Farmers
Best securities firm: Merrill Lynch
Best foreign bank: ABN Amro
In a banking sector where non-performing loans are such a problem it isn’t a particularly easy task to choose a best bank. Thai Farmers is the consensus choice among bank analysts to emerge from the crisis stronger than it went in.
With its local acquisition, Merrill Lynch has secured its position in Thailand as the number one broking firm. Its commitment – a key quality in Thailand – makes it well placed to generate lucrative primary-markets business when the market takes off once again.
The award for best foreign bank is given largely on the basis of commitment. ABN Amro is the first international bank to acquire a majority stake in a Thai bank. With over 100 branches in every one of Thailand’s 77 clearing zones this gives the Dutch bank an enormous advantage over foreign competitors. SI
Australia
Best bank: Westpac
Best foreign bank: Deutsche Bank
Best foreign securities firm: Warburg Dillon Read
Westpac, with its strong relationship banking, wins the award for best bank in Australia. It has participated in several landmark deals, and has dominated across the board. The main competition this year came from National Australia Bank, followed by ANZ and Commonwealth Bank of Australia. Westpac led the pack in short-term paper, fixed income, debt capital markets and project finance.
Although foreign banks are strong in certain areas, there are only a few contenders with a broad range of activities. It is a close-run competition between Deutsche Bank and Warburg Dillon Read, but Deutsche was just ahead mainly thanks to the breadth of its coverage.
Deutsche was top in repo, foreign exchange and bonds, in the top five for equities and bookrunner on such important deals as Puma Finance, Suncorp-Metway, State Bank of New South Wales and National Australia Bank.
Warburg Dillon Read has the biggest turnover on the stock exchange – 9.5% between July 1998 and April 1999 – and also stands out for the quality of its research. In the primary markets it led the A$2 billion (US$405 million) IPO for Cable &Wireless Optus. In the relatively quiet primary market of 1999 it has lead-managed 12 transactions worth A$750 million, compared with A$10.7 billion from 40 transactions in 1998.
It was also the number one lead manager of Australian domestic bonds in 1998, having led 24 deals. It advised Colonial in it’s A$1.4 billion acquisition of Prudential (Australia/ New Zealand), and in its defence of Australian National Industries managed to double the amount shareholders received by introducing white knight Smorgan Steel. It is adviser to the Victorian government on Australia’s first major railway privatization.
New Zealand
Best bank: Bankers Trust
Best securities firm: Credit Suisse First Boston
Since all of New Zealand’s banks (except the Savings Bank of Taranaki) are foreign owned, no prize for the best local bank is awarded.
With only 3 million people, New Zealand is a small market. The award for best bank in New Zealand goes to Bankers Trust. In the final throes of merging with Deutsche, it has performed well, and good things are expected of the resulting Australia-New Zealand team for the year ahead.
Says one banker: “Bankers Trust in New Zealand is hard to beat.” Its competition comes largely from Australian-owned banks such as Westpac.
With a commanding 21% market share on the stock exchange, Credit Suisse First Boston has completed NZ$2.5 billion ($1.4 billion) of primary equity deals since July 1998, and NZ$6.3 billion of M&A deals. Innovative deals include an offering of inflation-linked shares to the general public backed by gas receivables. If inflation is zero (it is currently negative in New Zealand) the investors get a zero rate of return per year. If it is 2%, a 16% rate of return – and upwards on a sliding scale. Jack Dyson
Central Asia
Azerbaijan
Best bank: International Bank of Azerbaijan
International Bank of Azerbaijan (IBA) is the only bank in Azerbaijan with any real international experience and therefore retains its 1998 award as best bank in Azerbaijan. IBA’s finances are generally healthy following a $44 million recapitalization in 1998. Moreover, so far, IBA is the only bank in Azerbaijan to have been privatized: it was sold in May this year.
The penetration of foreign banks and securities houses in Azerbaijan is constrained by stringent licensing requirements. And both domestic and foreign securities firms are thin on the ground.
Kazakhstan
Best bank: Kazkommertsbank
Best foreign bank: ABN Amro
Best securities firm: Kazkommerts Securities
Best foreign securities firm: Deutsche Securities
In a country where a financial restructuring process is in full swing, a handful of banks and securities firms have established themselves as the main players in Kazakhstan, Central Asia’s largest market. But Kazkommertsbank remains the leading local bank.
“In terms of local banks, without question Kazcommertsbank is the pre-eminent operation in Kazakhstan,” comments one western banker based in Almaty. “Its rivals are not really in the picture.”
Kazkommerts Securities is the only prominent Kazakhstan securities house. All the other local firms are small by comparison and service the negligible domestic retail market.
ABN Amro has the strongest penetration of any foreign bank in the market but it looks unlikely that such easy dominance will last forever. Already, ABN Amro faces challenges from a clutch of foreign banks that have recently set up in Almaty. Citibank, Deutsche Bank, ING Barings and HSBC Bank of the Middle East are all on the ground and are all making inroads into the market.
Deutsche Bank has ridden on the back of Kazakhstan’s links with Germany and has set up a brokerage operation in Almaty, Deutsche Securities. As yet, it is the only foreign presence in what remains a tiny securities market where volumes are virtually non-existent.
Headed by the former Kazakh minister for the securities market, Grigory Marchenko, Deutsche Securities is the only foreign player in this section of the market.
Uzbekistan
Best bank: National Bank of Uzbekistan
Best foreign bank: ABN Amro
National Bank of Uzbekistan (NBU) is by far the biggest and best capitalized local bank in Uzbekistan and consequently it accounts for over half of total business in the country.
ABN Amro has strong connections in the market, including with National Bank of Uzbekistan, which holds a stake in ABN Amro’s venture in the country. Other western European banks have toe-holds in the market – Deutsche Bank, Berliner Bank and Société Générale all have a presence on the ground – but ABN Amro remains the senior foreign player.
Kyrgyz Republic
Best foreign bank: Demirkyrgyz Bank
The local Kyrgyz banking market is underdeveloped. Demirkyrgyz Bank, a joint venture with Turkish bank Demirbank, is the only Kyrgyz bank that has emerged from the turmoil of the past year with its balance sheet more or less intact and is the only player in the market that attracts any foreign business. James Featherstone
