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Headline: Regional awards – Asia Source: Euromoney Date: July 2001 Author: Chris Cockerill Best Bank: Citigroup Best Debt House: Citigroup / Salomon Smith Barney Best Equity House: Merrill Lynch Best M&A House: Goldman Sachs Best Transaction Services: Citigroup Best Risk Management and Treasury: HSBC
Across all markets, with the exception of Hong Kong, it is the leading retail and commercial foreign bank. When Salomon Smith Barney was added to the equation, bringing with it its investment banking expertise, its product range and distribution went from strength to strength. While many of the domestic banks still struggle with internal problems and market consolidation, Citigroup kept rolling out new products becoming further embedded in the markets. “We are totally committed to Asia and continue to build our product range,” says Stephen Long, Asia Pacific group head of Citibank global corporate bank. “And our partnership gives us that broad product platform that is necessary on not only the commercial side but also the investment banking side.” While others questioned the reasons for being in markets such as the Philippines, which had a politically and economically difficult year, Citibank just kept investing more. It doubled the bank’s permanently assigned capital to $96 million putting it on par with many of the domestic institutions. Its assets are now three times greater than that of the next foreign bank. In Korea it posted net profits of $117 million, more than twice that of Deutsche. And in Taiwan, profits jumped 102% to $255 million. There are those that would like to believe that Citigroup is racked with internal and cultural bickering but you just have to look at the progress made as it charges up the rankings in equities, loan syndication and fixed income to realise it’s now a jaded argument. Citibank/Salomon Smith Barney can quite rightly lay claim to being the best debt house in Asia. As the debt market saw more players chasing fewer deals with pricing becoming more aggressive, Citibank/Salomon thrived. If loans weren’t possible it took the client to the bond market. When cross border business dried up, as it has for many Asian issuers, it took them to the domestic market. It ranks as number two underwriter for Asia Pacific issuers in G3 currencies, but is by far the strongest in local currency deals. In 2000 it arranged local currency issues in eight markets, two more than its nearest rival. Domestic currency debt transactions included: Singapore Land Transport Authority’s S$500 million 15-year bond, the longest tenor issue out of Singapore; and in the same market the S$600 million issue for the Port of Singapore Authority, the largest single Singapore dollar deal to date. The groups syndicated loans were spread across nine markets and totalled $6.9 billion dollars. SSB’s Asia Pacific CEO, William Mills, says: “The combination of the big loan product with our fixed income product is a very powerful model. And this combination has helped present opportunities for our clients that are very compelling.” The houses traditionally strong in fixed income are finding that their market share is being altered, and it’s not a first quarter or half year aberration. With JPMorgan also getting in on the act and seriously challenging Citibank to become the best debt house in the region, firms like Merrill Lynch and Morgan Stanley will have to start thinking very seriously about how they are going to position themselves and their products in the near future. From May to December 2000 attention was focused on north east Asia. Jumbo equity deals, especially out of China, seemed to occur every month. With the exception of Singapore, south east Asia remained moribund. With all eyes on China, Morgan Stanley took centre stage, bringing two of the most important and largest deals to come out of China. In June it was joint bookrunner for the $5.7billion China Unicom transaction, the largest Chinese IPO to date. It followed this success up with the equally impressive Sinopec IPO, which weighed in at $3.46 billion. Not to be outshone, Hong Kong had its first experience of privatization with MTRC going under the hammer. Goldman Sachs, UBS Warburg and HSBC took the lead in this, Hong Kong’s largest ever retail offering.
But it’s Merrill Lynch that pips UBS to the post. It is a pan- Asian equity house. It was bookrunner for 25 companies spread across seven countries, raising $31.6 billion. Deals of note include the renowned Hutchison $3 billion exchangeable into Vodafone. In India, with its joint venture DSP Merrill Lynch, it took the first Asian pharmaceutical company to list in New York. Merrill Lynch’s operation is by no means a lop-sided primary house. It continues to excel in the secondary markets. In Australia, Thailand, Philippines and Singapore it has over 10% market share in equity trading. Its research capability, with 113 analysts covering 16 countries throughout the region, is very highly regarded. “Investors need service in difficult markets too,” says Aj Rahman, Merrill Lynch’s regional head of equity capital markets. “And one of the reasons for our success is due to our platform. We have a bigger, deeper infrastructure. And the more difficult the market, the more the client needs these capabilities.” The Asian M&A market is changing. The traditional stakes and sales purchases, where no control passes, are being overshadowed by real acquisitions leading to proper industry consolidation. “Domestic market leaders are maximizing the potential of the home market and then going for growth outside,” says Michael Carr, Goldman Sach’s head of investment banking for Asia. And it’s Goldman Sachs that leads the way in such transactions, advising DBS Bank’s foray into Hong Kong with its $5.3 billion purchase of Dao Heng Bank. Everyone tends to wait for the first deal. It sets pricing benchmarks, structural benchmarks and who will be acquirer or target. By being involved in the first such deal Goldman Sachs has just added greater merit to its already formidable reputation. Over the past year, Goldman announced 34 deals spread across 11 countries, including domestic and cross-border transactions. Five of the deals completed broke the $1 billion mark. “We have the most knowledge and experience globally of any bank and that’s what we can bring to bear on any given market,” claims Carr. Judging from the bank’s repeat business, clients agree. In the last year it completed another two deals for Hutchison Whampoa, bringing its total to nine M&A mandates from the group in the last three years. It also notched up two transactions for Taiwan Semiconductor. The best bank at transaction services is Citigroup. Its products and strategic model don’t differ that greatly from HSBC, but when you take a step off Hong Kong and look at the region as whole, Citigroup’s scale of operations is significantly larger. Spread across 13 countries, Citigroup’s network is the broadest. And as a consequence it offers more products, has more volume and most importantly, has more customers. Citibank is also the only bank in Asia-Pacific which operates a 13 country regional cash-processing centre providing cash-management services for cross-border payments and collections. Citigroup’s customer base is not as narrow as many perceive it. It is not just made up of the big multinational US corporates. Being so firmly established within the local markets it’s the small domestic companies that comprise the majority of its clients. HSBC doesn’t leave empty handed. Its transactional services are highly rated but it’s the risk management and treasury businesses that are even more highly praised. It has 19 dealing rooms across Asia enabling it to retain its position as a major market maker in over thirty currencies globally, and is a leading dealer in interest rate swaps and options. It is also becoming more IT savvy, being responsible for the development of BondsInAsia. This consortium site ,with Deutsche and Citibank now in it, will further enhance HSBC’s capabilities in electronic trading of international and domestic fixed income instruments. |
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