Best Bank:
Chinatrust Commercial Bank
Best Equities:
Goldman Sachs
Best Debt:
Citigroup / Salomon Smith Barney
Best M&A:
Goldman Sachs
Banking consolidation and asset quality, as in all Asian countries, is the talk of the town in Taiwan. In short, the country is overbanked and has been for some time. But it is only now that the necessary legislation and legal framework are being introduced. This will allow the stronger public banks to acquire the troubled private banks. The question is, however, once the legislation is in place, will the banks sort out the problems by themselves? And how long will it be before they stop blaming all their woes on the slowdown in the US economy?
The banks offer the same range of products, but it is two relatively small private banks that stand out: Chinatrust Commercial Bank (CTBC) and the 10-year old Bank Sinopac. Both are praised for their quality of service and attempts at innovation but it is CTBC that comes out ahead. It is the ninth-largest bank in Taiwan by assets, these having increased by 14% in the year to May 2001. In international syndicated loans it is second only to Citibank and was involved in deals worth $270 million, including a $15 million loan to Malaysia First Silicon.
In the local currency syndicated loan market CTBC was lead arranger for 12 of the 17 deals that took place. These included a NT$13.5 billion deal for Acer Display Technology, and Chunghwa Picture Tubes’ NT$13.5 billion facility.
On the retail side it maintains its strength in the credit card market, boosting its share from 13.58% in June of last year to over 17% year to date. The bank is also financially sound. Its non-performing loans remain low at 2.09% of total loans outstanding, well below the sector average of around 7%.
Over the past year, bond yields have continued to fall, but competition to win mandates was as fierce as ever. Domestic underwriters such as Grand Cathay Securities are still dominant, but once again the Citibank/Salomon Smith Barney platform offers another level of service. It competes very successfully with the domestic players in bonds and in loans. It led the way with 35% market share in new Taiwanese dollar syndicated loans, completing 23 deals. And in local bond issues it is catching up with Grand Cathay and Capital Securities Corporation.
It was a successful year for Goldman Sachs in both M&A and equity. In M&A it was sole adviser in two of the largest deals. In June 2000 it closed Taiwan Semiconductor Manufacturing Company’s $2.74 billion takeover of TSMC-Acer Manufacturing Corporation. It was rewarded with repeat business and successfully closed TSMC’s $6.4 billion takeover of Worldwide Semiconductor Manufacturing too.
In equity, Goldman Sachs proved itself again to be the market leader. By executing five transactions it took over 32% market share of total equity issuance. That amounts to $2 billion. Deals included the largest Taiwanese equity offering in a transaction worth $1.2 billion – yet more repeat business from TSMC.
