Best bank
HSBC Best equities house
UBS
Best debt house
HSBC
Best M&A house
Morgan Stanley
HSBC dominates Hong Kong?s banking market. Even excluding subsidiary Hang Seng Bank, HSBC is the largest bank in the debt market, the largest provider of trade services, largest in Hong Kong cash management and payment services, and the largest sub-custodian and fund administrator. Over 70% of Hong Kong?s adult population holds an account with HSBC.
Despite its size, HSBC increased operating profit from Hong Kong in 2003 and grew its loan book by 8.3%. In its personal financial services division, structured products grew by 91%, and open-ended fund sales by 78%. Its credit card business also grew strongly, with the loan book up 16%. The life insurance business enjoyed a 71% increase in new regular premiums and the bank receives an average of HK$700 million ($90 million) a month in new Mandatory Provident Fund contributions.
With the equity markets coming back strongly in late 2003 and early 2004, it proved to be a busy period for Hong Kong?s investment bankers. UBS led the way with a continued leading market share in the secondary market in Hong Kong and an impressive performance in capital raising. It completed nine deals in the period under review, on which it acted as sole bookrunner on seven. Largest of these was the $1.89 billion sale of a 10.1% interest in Bank of China (Hong Kong) by its mainland parent, the largest ever accelerated placing in Asia.
UBS also raised a total of $847 million for local property company New World Development in two issues. Even when the IPO market turned sour towards the end of the first quarter in 2004 and threatened to derail the IPO for local mobile operator China Resources People?s Telephone, UBS demonstrated its commitment to the market by restructuring the deal, including subscribing for more than 8% itself, ensuring the deal went ahead.
Although Goldman Sachs continues to lead the way in Asian primary issuance, UBS successfully closed the gap on its arch-rival this year, finishing with a 10.4% market share, raising a total of $5.7 billion of equity from leading 24 issues. UBS was still involved in four of the year?s 10 largest equity offerings, including the $1.888 billion accelerated bookbuild for Bank of China, a $1.6 billion ADR for Chunghwa Telecom of Taiwan and a $1 billion block trade for Korea?s Hana Bank. UBS also executed deals in more countries and sectors than any of its competitors.
HSBC wins the award for best debt house by a big margin. Even without the Hutchison Whampoa bond issues, which raised $9.6 billion and in which HSBC participated in all bar one, the bank would have justified its award. It is the number one bookrunner in Hong Kong dollar bonds, with a market share of 57%, the top bookrunner in G3 currencies for Hong Kong issuers with 29% of the market, the top retail bond bookrunner and the top syndicated loan arranger for Hong Kong borrowers (24% market share).
The predominance of HSBC is underlined by its role with the government in its HK$6 billion securitization programme for toll tunnels and bridges, where it was the sole adviser, structuring agent and bookrunner.
HSBC also launched the first 15-year transaction for MTRC, the longest tenor in the local market; it underwrote the largest bond ever issued by an non-Japan Asian issuer, the $5 billion offering from Hutchison Whampoa; and executed Asia?s largest ever synthetic securitization. The bank?s $500 million Eurobond for PCCW-HKT and its subsequent HK$2.8 billion revolver and term loan demonstrated its ability to raise debt capital for weaker credits also.
Genuine M&A in Hong Kong is hard to come by. Most league tables are dominated by shell and reverse listings that are more capital markets transactions than real M&A. Morgan Stanley stands out despite the fact that it chooses not to participate in the shell and reverse takeover market, unlike some competitors. Morgan Stanley advised Wing Hang Bank in its $615 million acquisition of Chekiang First Bank, and it is also the sole adviser to Kowloon Canton Railway on its $15 billion merger with MTR Corporation.
