Best bank:
Bank of the Philippine Islands
Best equity house:
ING Barings
Best debt house:
Citigroup / Salomon Smith Barney
Best M&A house:
ING Barings
It’s no surprise that the confidence of investors has taken a severe knock when it comes to the Philippines. GDP growth estimates have been slashed from over 4% to around 3%. There is some way to go before confidence returns. But political stability is on the way.
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Arroyo: one problem down, several more to go. |
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President Gloria Macapagal Arroyo is apparently in full control and willing to wield her handbag if anyone gets in her way. And the Central Bank of the Philippines is looking to get tough on money laundering. However, first there are the small cases of former president Joseph Estrada’s trial for plunder, which continues to cause jitters, and Abu Sayyaf’s habit of kidnapping unfortunate tourists and locals who dare to venture into his realm.
In all of the mess, Bank of the Philippine Islands seems to be shining through. Money is shifting out of the mid-sized banks into BPI. In terms of quality it is the best bank in the Philippines. And because of this trend BPI is able to price its loans aggressively. It is possible to borrow from the bank at 250 basis points below its nearest competitor. Once the bank has snagged the customer, it is unlikely that they will move to other banks until they too can offer such cheap lending rates.
In terms of technology BPI is some way ahead. It has the infrastructure in place to boost its e-banking and is in a position to move away from telephone banking, which it in fact pioneered. Last year the bank’s call centre processed over 10 million calls.
Alongside its 689 branches, the Philippines’ second largest network, it has 937 ATMs, a figure far in advance of its competitors. It also has the advantage of owning one of the ATM networks. It has a strong presence in the mortgage market and approximately a 40% market share in auto loans. BPI is a strong player in wholesale as well as retail banking. It leads the way in the Philippines in corporate lending, leasing and asset management. Its assets grew 7.4% in the past year but its non-performing loans remain relatively low at 13% with 60% provisioning. The industry average hovers around 40% provisioning.
Over the year the equity market was dead, with daily turnover dropping below $10 million a day. In this depressing environment ING Barings was able to maintain market share and topped the tables in secondary market trading. Merrill Lynch also continued to grind it out. With the equity market in such a pitiful state it is not surprising then that there was only one equity issue of note: Globe Telecom’s $100 million Philippine depositary receipt. ING Barings acted as sole domestic placing agent and as co-lead manger in the international tranche. It was the only institution to hold the distinction of being involved in both the domestic and international sides of the deal. ING Barings also continues to lead in M&A advisory. It was involved in some of the largest deals on offer and able to boast repeat business. In August 2000 it acted as joint adviser for the Philippines government on the sale of its 30% shareholding in Philippine National Bank, a deal worth $147 million.
The debt markets are a government play, and have yet to really develop. But with many corporates needing to raise money over the next year this may be the chance it needs. And because of the problems in the equity market the debt market showed signs of a slight pick up. On the loans side JP Morgan and Citigroup / Salomon Smith Barney led the way with seven and nine deals respectively.
But on the bonds side Citi wins after leading issues for Development Bank of the Philippines and the Republic of the Philippines ¥35 billion ($282.4 million) samurai offering.
