 |
Best Bank: Citi |
While Citi globally was floundering and flirting with oblivion, Citibank Singapore was cementing its position as a head-on competitor to Singapore’s domestic banks. In fact, for its levels of growth across the board in a year when most have shrunk, it is the best bank in Singapore this year.
Citi is no longer a foreign competitor to the locals. It is a local. With a staff of 8,068 in Singapore, it is believed to have more employees than any other bank in the country. Its three key legal vehicles in Singapore between them recorded a net profit of S$1.2 billion ($824 million) on revenues of S$2.3 billion – more than OCBC, on a par with UOB and lagging behind only DBS. Its mainstay local consumer banking arm, Citibank Singapore, logged record profits despite the environment. The global markets business, covering equities, fixed income, commodities and currencies, grew 20% in 2008, transaction services 11%, FX volumes 15%, and trade finance confirmations 400% despite Singapore exports crashing.
Citi will never beat DBS for mortgages or straightforward loans but nevertheless it is in this retail space that Citi has made the greatest progress in recent years. Its branches reach beyond the city and into the heartlands now, and its shrewd tie-ups – the mass transit system, Exxon Mobil service stations, Citibank-AXS bill payment terminals, widespread ATMs – have made it as recognizable locally as many Singaporean institutions. One in two eligible card-holders in Singapore now has a Citibank credit card – the market leader.
What about the name risk, the knock-on effect of global troubles? Deposits in both Singapore dollars and other currencies dipped but are now above where they were in October, the Smith Barney shift into the Morgan Stanley venture makes no real difference here and the wealth management platform, from top-end private banking to mass affluent, remains the broadest in the country and the kicks it has taken have been no worse than elsewhere. Add to this a good year in investment banking and Citi has earned its award.
Domestic houses remain dominant in the Singapore debt markets, with DBS and OCBC both enjoying strong years. DBS wins for the strength and depth of its franchise across bonds and syndicated lending. It is the only bank to have completed a bond issue for every statutory board that has issued in the Singapore dollar bond market, it has proven distribution capabilities, it has been a pioneer in important new structures such as Singapore Reits, and it gets the big deals.
In our review period, these included lead-managing the largest Singapore dollar bond issue to date, albeit a self-led deal, a S$1.5 billion hybrid tier 1 note issue. It was a joint lead for a S$600 million issue for Maybank, the first time a Malaysian bank had issued innovative tier 1 capital securities through Singapore. Other big deals were for SP Power Assets, Korea Development Bank and Sembcorp.
Alongside this, DBS has a leading syndicated finance team, a useful role in a record year for syndicated lending in Singapore. DBS’s involvement included financing Singapore’s two integrated resorts and a range of real estate, power, technology and shipping deals.
The three key equity deals were all rights issues: S$4 billion for DBS in January then two different arms of the CapitaLand empire in March, first CapitaLand itself for S$1.84 billion, then CapitaMall Trust for S$1.23 billion.
Two banks appeared on all three: DBS and JPMorgan. So which to choose? Both make compelling cases – DBS also led an important deal for Mapletree Logistics Trust, another rights issue – but JPMorgan shades it, despite a lower quantum of underwriting in the DBS deal, after helping Olam International raise S$307 million through a preferential offering at a time when most equity offerings in Asia were being cancelled or postponed. (JPMorgan would go on to help Olam raise a further $300 million in convertibles two months later.)
What stands out is the performance of the rights issues. On the three JPMorgan and DBS were involved in, the share prices remained stable or climbed until the automatic adjustment leading up to the ex-rights date. On the Chartered Semiconductor rights issue, which featured neither of them, the stock sank 40% on announcement.
The deals that mattered most in Singapore in our award period were not the league table-grabbing acquisitions of western bank stakes by sovereign wealth funds – Temasek in Merrill Lynch, and GIC in Citigroup through its conversion of preference securities – but the sales of power assets by Temasek. Credit Suisse was the sell side adviser for the $2.8 billion sale of Senoko Power to Lion Power Holdings and the $2.5 billion sale of PowerSeraya to YTL Power.
Credit Suisse had the broadest range of additional involvement in Singapore M&A. It was involved in two more Temasek deals, representing it on its sale of PT Bank Internasional Indonesia to Maybank and representing the purchaser when Qatar Telecom bought a stake in PT Indosat from it, in the largest-ever Middle East-Asia transaction. Other deals included UOB’s delisting tender offer for its Indonesian subsidiary, the sale of Singapore Food Industries, and a Reit deal for Allco. Although its role defending Lee Latex from a hostile bid for Straits Trading didn’t result in a deal, the fact that this was CS’s first advisory for the Lee family demonstrates the trust it has built locally.
