BEST BANK
HSBC
BEST EQUITY HOUSE
Goldman Sachs
BEST DEBT HOUSE
HSBC
BEST M&A HOUSE
UBS
HSBC wins the best bank in Hong Kong award again. The bank is completely dominant in its own right in Hong Kong, even before any contribution from subsidiary Hang Seng Bank is included.
HSBC has the largest retail banking network in the territory, and leads in almost all retail products, including pensions, bancassurance, credit cards and online banking. With a 22.8% market share of deposits, 10.5% of consumer finance and almost one-third of all credit card finance, HSBC is clearly the market leader in retail banking, where it earns some 41% of its profits. However, in treasury and risk management, corporate banking, local debt financing, trade services custody and ancillary services, HSBC also leads the competition by the widest of margins.
The bank’s complete dominance of its local market is clearly a key contributing factor to its impressive financial ratios. With operating profit for 2004 at $3.33 billion, up 24% on the previous year, a cost-to-income ratio of just below 40%, a return on equity of 27.5% and a total capital ratio of 11.9%, there is simply nowhere that HSBC is weak in Hong Kong.
Goldman Sachs wins the best equity house in Hong Kong award with a strong performance in what was a relatively quiet market. Goldman Sachs comfortably led the equity and equity-linked league tables, raising $1.4 billion from four issues, including $1.3 billion from three IPOs: the $899 million IPO of Hutchison Telecommunications International, a controversial and difficult deal that needed all of Goldman’s ingenuity and distribution skills to complete; a $432 million IPO for Foxconn International, a highly successful spin-off from Taiwanese parent Hon Hai Precision Industries; and the $140 million IPO of Pacific Basin Shipping.
In secondary equities, Goldman Sachs continues to lead in prime brokerage services and has increased its research coverage of Hong Kong stocks by 25% over the past four years.
As a testament to Goldman’s aftermarket skills in supporting sponsored issues, the firm leads the competition in IPO aftermarket performance, with 27% average appreciation.
HSBC is once again the clear winner of best debt house in Hong Kong: its dominance of the Hong Kong dollar debt market is nothing short of vice-like, with a total market share of all debt deals of 29%.
HSBC is the number one bookrunner of bonds in all currencies for Hong Kong borrowers, of G3 bond issues by Hong Kong borrowers, and of syndicated loans in all currencies and in Hong Kong dollars for Hong Kong borrowers. In fact there is no area of debt finance in the territory that it does not lead.
HSBC transacted all of the key debt issues from Hong Kong during the period under review. These included the HK$20 billion ($2.6 billion) dual currency (Hong Kong and US dollar) global bond for the Hong Kong SAR government and the HK$6 billion ($770 million) securitization of the Hong Kong government’s tolled facilities, the first such securitization in Asia.
UBS is Hong Kong’s best M&A house, a surprise result perhaps given that the bank has not hitherto been known for its prowess in M&A. However, it topped the M&A league table in Hong Kong with a 29% market share. True, its deal count includes a massive $4.1 billion asset injection from China Mobile into its Hong Kong subsidiary, but even discounting for that transaction, UBS completed a wide range of large transactions, including several cross-border deals.
Chief among these were the $993 million acquisition of Marionnaud Parfumeries by Hutchison Whampoa, the $707 million acquisition of the Milwaukee Tool and AEG Power Tool by Techtronic Industries, and the $126 million acquisition by Standard Chartered of Advantage, a Hong Kong consumer finance company.
UBS’s strong performance in Hong Kong M&A has continued past the review period, with the $2.4 billion acquisition of the Galaxy Casino in Macau by K Wah Construction, the $133 million acquisition of Union Petro-Chemicals by Wisdom Venture and Eastern Pacific’s sale of its PCB business to Merix Corporation.
