Best bank – Sinopac
Best equity house – Citigroup
Best debt house – Citigroup
Best M&A house – Citigroup
Poor risk management and ill-advised lending to corporates is still causing concern for Taiwan’s banks. But over the past year there has been a concerted effort to get bad loans out of the banks. The over-banked market is also showing signs of consolidation. But some observers describe the process as a facade. As one analyst remarks: “This is more about horizontal diversification than market consolidation. If you have a large financial group taking over an insurer or a bank what does this actually do for the banking market? Very little.”
Bank Sinopac stands out quite clearly as a leader. Headed by the charismatic Paul Lo, it is one of the few banks to realize that its future lies just as much outside Taiwan as in. Its operations now extend from Taiwan to Hong Kong and California, and it has developed an important alliance with First Sino Bank in Shanghai. No other bank in Taiwan can claim such a wide-ranging business. The bank is also internally balanced and focuses as much on retail as wholesale business. Such diversification has meant that its financials are strong. Its NPLs stand a lot lower than the country average of over 14% at just 1.73%. The bank prides itself on its modernity such as its electronic banking. In the past year it has remained in front of competitors by continuing to develop its Regional Services Platform, which enables collections, trading, trade services and letters of credit issuance to be carried out on-line.
Equity linked was the only show in town for Taiwan’s equity houses. Citigroup took control of that market. It was involved in deals varying in size from $30 million, up to the $345 million transaction for Compal Electronic in October of last year. Citigroup was sole bookrunner in two equity convertible deals and lead manager in another seven. Its major offering this year was in April when it re-opened the island’s financial institutions equity-linked market, after a flurry of deals in 2002, for Taishin Financial Holding Company with a $220 million convertible bond.
Citigroup has moved rapidly up the charts in Taiwan and is now the top arranger of Taiwanese syndicated loans and of New Taiwan dollar bonds. It raised $3 billion for Taiwan’s corporates, giving the bank a 22.3% market share. In the domestic bond market its grip is particularly impressive. Through 13 deals it raised NT$38.3 billion (US$1.1 billion), 50% more than Deutsche Bank, its nearest competitor. In syndicated loans the statistics are equally persuasive. The bank has more than double the market share of second-placed Bank of Taiwan. As Citigroup is quick to point out, no other competitor scrapes into the top six in either market. Of the 13 deals where it was bookrunner, it is proudest of bringing Nordic Investment Bank to the New Taiwan dollar market for the sixth time with a NT$3 billion seven-year offering.
Citigroup also takes the best M&A house award. It was heavily involved in financial sector restructuring and in August advised on and completed one of the main deals of the year when Fubon Financial Holdings took Taipeibank under its wing. The $2.3 billion deal created Taiwan’s largest private bank by assets. But Citigroup’s deals were not restricted to the financial sector. It was also involved in a four-way merger that brought together visual display devices companies Lite-On Technology, Lite-On Electronics, GVC Corp and Silitek Corp, creating a company with a market capitalization of $3.1 billion.
