Asian Awards for Excellence 2011: By country
|Awards for Excellence 2011
Regional Awards for Excellence 2011: Asia
All regions and countries
|Asian winners by country
Best bank: National Australia Bank
National Australia Bank hasn’t been anywhere near contention for the best bank award for five years. But since Cameron Clyne’s appointment in late 2008 as chief executive, a new strategy has been taking shape at the once troubled bank, and it has started to bear fruit in the past 12 months.
Some of it is good-old brazen competition with rivals, undercutting the other big four banks on home-loan interest rates and fees, and offering people up to $700 to switch their mortgages from Commonwealth Bank and Westpac. It’s arguable whether or not that constitutes the making of a great bank but it is certainly winning lots of customers and has put NAB in a position of influence in the industry that it hasn’t had for a decade. "It’s all been about NAB this year," says one analyst. "They have been setting the agenda in terms of what’s been happening."
NAB has also been winning market share on the commercial side; it is the leader in business lending and is continuing to improve margins. And the MLC wealth management arm – a strong business since well before Clyne’s time – continues to dominate as it digests its acquisition of Aviva.
Analysts like what they see. Under Clyne, more or less every big broker in Australia has moved to a buy recommendation on the stock, and results in a tricky environment are justifying the support. First-half results in May showed a 21.7% year-on-year climb in cash earnings, underpinned by margin and cost management and improving asset quality.
It’s not perfect: the bank continues to be dogged by technology issues, but the change of direction is impressive.
UBS is by some distance dominant in Australian equity capital markets; it raised A$8.5 billion ($9 billion) during our review period, triple anybody else’s figure. It was on the one true landmark IPO in Australia during the year – QR National’s A$3.75 billion deal, the biggest since 2006. But topping the leader board this year required roles on a host of secondary transactions. UBS’s included a A$992 million placement and block trade for Western Australia Newspapers, a successful and tightly priced A$542 million entitlement offer for Transurban, an effective re-IPO for Gloucester Coal, and other entitlement offers or placements for Downer EDI, Tabcorp, Ivanhoe and numerous others. It was innovative too, structuring an equity credit hybrid for Santos, the first in the market.
The Australia debt capital markets award always requires a decision on whether to reward those who excel in taking Australians overseas and foreigners to the Aussie dollar, or those who thrive on the buoyant local market. This year the award goes to JPMorgan, the leader in taking Australians to the international debt markets.
JPMorgan has been dominant in US dollar transactions over the past 12 months, nowhere more so than in financials, with lower tier-2 and tier-1 perpetual notes for Macquarie, and big benchmark US dollar bonds for the big four and for government-guaranteed bonds. Corporates it has taken overseas include Woolworths, Asciano, Goodman Group, Dexus Property, Sydney Airport and Singtel Optus. It has also brought high-yield issues for Midwest Vanadium and Fortescue Metals. Outside the mainstream, it brought hybrids for Macquarie and asset-backed deals for Macquarie and Bankwest.
Heading in the other direction, the bank has brought Lloyds TSB, Rentenbank and various supranationals into the kangaroo bond market. Its strength in syndicated lending and debt advisory has also helped.
Mergers and acquisitions was the tightest of the Australian categories, with at least four credible candidates, but UBS takes it for its role on 35 deals, worth more than A$40 billion. The bank was involved in many of the deals that mattered: Centro Group’s $9.4 billion platform sale to Blackstone; Brambles’ acquisition of Ifco Systems; CSR’s sale of its sugar and renewable energy business to Wilmar International; AMP/Axa Asia Pacific; and advisory roles for other clients, including Centennial Coal, Village Roadshow, Intoll, ING Industrial Fund, Carlyle and Nufarm.
Although it was excluded by the cut-off of our review period, by June 2011 it had become clear that a new player was a serious contender: Barclays Capital, which having had no platform at all a year ago is now the year-to-date leader in 2011. One to watch for next year’s awards.
China’s banks continue to be the cause of much speculation among domestic and foreign observers. Many are concerned that the banks’ heavy lending over the past decade of growth could lead to another bad-loan boom to rival that of 2000/01. As the government caps lending rates and increases capital reserve requirements, the onus is on the country’s banks to increase overseas revenues and become more global. Bank of China wins this year’s award for best bank, having had as good a year as its peers in lending and increasing profits while being much more international. The bank has more assets overseas (21.5%), and a higher proportion of profits from offshore business (21.8%) than any of its peers, and in 2010 built on its lead by establishing 13 new foreign branches. The bank’s subsidiaries in Macau and Hong Kong have become integral to the rise of the Chinese currency offshore by being mandated as renminbi clearing banks. It has opened 350 cross-border renminbi clearance accounts for overseas banks and claims to serve clients in more than 100 regions and territories. Bank analysts, although remaining cautious about the sector as a whole, this year praised Bank of China for a capital-raising plan worth Rmb100 billion ($15.5 billion) in the form of a convertible bond and A+H share rights issue.
The big story in China debt this year was the astonishing rise of the offshore renminbi-denominated bond (CNH) market in Hong Kong, but for these awards prowess in that market will be considered under the best debt house in Hong Kong section. Attracting much less publicity than the CNH market but dwarfing it in size, China’s onshore bond market continues to rise in importance as the government tightens bank lending. UBS won this award last year for a striking run in breaking into the domestic bank monopoly in onshore debt, and deserves to retain the award on the basis of another strong year. No other international bank cracks the top-10 bookrunners, and UBS is able to offer abilities that the local banks can’t match on some transactions, such as placing international deals to its vast private banking network. The bank was bookrunner on more than $5.8 billion-worth of bonds from 19 deals, something that foreign banks trumpeting their prowess in the CNH market might pause to consider given that the typical deal there is worth tens of millions rather than hundreds. Rivals are belatedly starting to set up securities joint ventures, while China’s authorities are considering allowing foreign firms to underwrite deals in the onshore market. Until then, though, UBS deserves recognition for the lead it has established among its peers in a market that is arguably much more important than its Hong Kong sister.
After years of being considered by most global investors to be the world’s most exciting market, Chinese equities experienced a reality check in 2010 and the first quarter of 2011 as a string of scandals and controversies among Chinese companies listed overseas dampened enthusiasm for the sector as a whole. Meanwhile the myth that no domestic offering could fail was busted by two deals on the Shenzen exchange doing just that. Among Chinese issuers looking to tap the international market, the trend was to hire more banks and secure more pre-IPO cornerstone investment as a hedge against this increased deal uncertainty. That meant bookrunners had to not only get on the deals but also ensure they took lead roles such as the global coordinator position to distinguish themselves from the pack. Goldman Sachs takes the award for best equities house in China for doing just that: while rivals scoff that its IPO business is sometimes lacking, and that it lost money on the big Vodafone/China Mobile secondary sell-down, clients that Euromoney spoke to consistently ranked it as the most helpful bank on the deals it did work on. Goldman was the highest-remunerated foreign bank on the $22.1 billion Agricultural Bank of China IPO; led Vodafone’s $6.6 billion sell-down in China Mobile; was a global coordinator on Bank of Communications’ $4.8 billion rights issue; and worked on China Merchant Bank’s $3.2 billion A+H share issue. Although the bank did not do as much IPO business as rival Morgan Stanley, its work in secondary offerings and convertibles made it the leading league-table player in overall equity capital markets activity, and the most well-rounded, most sought-after China equities bookrunner.
JPMorgan is building itself a reputation as the up-and-comer in China after being under-invested in the region’s most important market in the early years of this century. This year it had the happy knack of avoiding many of the subsequently controversial capital markets deals that plagued its competitors. However, it is in M&A that it has made the most progress. JPMorgan takes this year’s award for best M&A house in China, having topped the Dealogic league table for completed deals once fairness opinions are excluded and, more important, having proved itself a buy-side adviser of choice for Chinese companies looking to expand overseas. Another crucial factor in a year in which key M&A deals across the region tended to get snarled in political problems was that JPMorgan managed to close some big deals. Chief among these was the $3.1 billion acquisition by CNOOC of a 50% stake in Argentine oil and gas group Bridas. JPMorgan also advised Guangzhou Auto group on its purchase of 62% of Denway Motors for $3.2 billion, a deal cited by many China M&A practitioners as perhaps this year’s most challenging and interesting.
Best bank: Standard Chartered
For the purposes of this year’s awards, the relative prowess of Hong Kong’s banks in the offshore renminbi bond market will be considered in the debt house category to avoid rewarding any one bank twice for the same business line. Setting that business aside, although it was a top performer anyway, Standard Chartered deserves recognition as the best bank in Hong Kong after years of dominance by HSBC. The latter is still the dominant force in Hong Kong banking, and did not have a bad year, but Standard Chartered deserves its accolade for the progress it has made. It made a record income of $2.5 billion in Hong Kong this year, up 5% year on year, its wholesale division posted record client income and profits, and it grew deposits in renminbi 10-fold against a four-fold market average. Its aggressive loans team established themselves as the leading syndications bookrunner, driving capital markets sales up by 110%, and while competitors have been briefing journalists for several years that this business is risky, Standard Chartered seems confident that it knows what it is doing. Citi too has been chipping away at HSBC’s lead by opening more branches and launching its smart banking offering. As with last year there is the sense that HSBC’s smaller rivals in Hong Kong are taking advantage of their reduced scale to be more nimble and aggressive in offering services to retail clients. It will be interesting to see how HSBC responds next year.
Although rivals caught up a little with Hong Kong’s dominant bank in retail and commercial banking, in debt capital markets HSBC has extended its lead. It executed 20 deals in G3 currencies, more than double any competitor’s tally, raising more than $2.9 billion for clients. It innovated too, completing the first ever 15-year dollar deal in the territory for Hong Kong Land, and the first bank capital deal in Asia with a regulatory switch feature for Chong Hing Bank. Finally, HSBC was the undisputed leader in Chinese renminbi bonds in Hong Kong, with a 30% market share throughout the year thanks to its early adoption of the programme and natural advantage in the form of a ready-made renminbi deposit base.
As with its China business, Goldman Sachs wins the award for best equities house in Hong Kong as much for the role it played in deals it was involved with as for the total volume of business it did. The US bank ranked first across equity and equity-linked deals this year; its China business did slightly fewer IPOs than its closest rivals but more overall equity capital markets deals thanks to a strong secondary offering and convertible bond track record. On the year’s biggest Hong Kong deal, the record-breaking $20.1 billion AIA IPO, among 11 banks working on the deal Goldman was lead global coordinator, sole stabilization agent and sole settlement agent. It claims responsibility for generating 65% of the crucial cornerstone investment orders. Goldman Sachs also took the lead on the $5.5 billion IPO of Li Ka Shing’s Hutchison Port Holdings, an offering that attracted some controversy for placing in Singapore because Hong Kong could not support the deal structure at the time. As one rival banker candidly admits, it was the deal that most Hong Kong investment bankers wished were in their 2011 portfolio and a smartly done piece of banking by the firms involved. The bank also worked on more conventional deals, including accelerated bookbuild placements for Hang Lung Properties and Sino Land.
Deutsche Bank is the surprise winner of the best M&A house in Hong Kong award this year, having won a leading 26% market share with 10 deals. The largest of these was container ports operator Cosco purchase of a 13.7% stake worth $520 million in Sigma Enterprises, from Danish conglomerate Maersk. The bank seems to have built market share in Hong Kong through picking up a large number of smaller mandates, in opposition to its regional strategy of hunting the big cross-border deals. Either way the firm not noted in the past for its M&A franchise has been making headway region-wide and deserves the accolade for best M&A house in Hong Kong for picking up more mandates and a greater volume of deals than its more storied rivals.
Best bank: HDFC
Best debt house: Axis Bank
Best equity house: Citi
Best M&A house: Morgan Stanley
India’s best bank award tends to be contested by the country’s largest private-sector lenders, HDFC and ICICI, interspersed with the occasional exception (Standard Chartered won the title in 2010 after an outstanding year).
This year the pendulum swings back to the big two, and in the direction of HDFC, a genuinely outstanding lender in a country whose banks are mostly focused on domestic affairs. HDFC is a worthy winner of this award. Net profit rose 33% in the financial year to March 31 (ICICI Bank’s earnings by contrast rose by 28%).
At every turn, HDFC’s figures are impressive. Its full-year dividend per share rose 37.5%; its balance sheet and deposit base expanded in size by a quarter; and – perhaps following a broad decree from the Reserve Bank of India to all banks to expand more into third-tier and fourth-tier cities – its branch network grew by more than 250, in 217 new cities, to nearly 2,000.
HDFC crushes its rivals in every conceivable way – a view backed up by analysts and bankers. One noted: "HDFC from an investor’s viewpoint is the best place to park your money, and where you have no worries about the asset or management quality."
Observing the progress of India’s debt markets can be like watching paint dry: something is happening, but the slow process of finalizing deals is rather dull, if oddly comforting.
Nonetheless, the market is there, and there is money to be made. Axis Bank again wins the award for best India debt house. There’s no guarantee that Axis will retain its pre-eminent position since rivals, notably local house ICICI as well as Citi and Barclays Capital, close in every year.
Axis garnered more than 12% of the market over the past year. The bank is prolific, completing more than one deal every three days. It doesn’t always do the biggest or most glamorous transactions, and it is geared strongly toward the public sector – three transactions were for Power Grid Corporation of India and Power Finance Corporation, worth a combined $1.95 billion.
It has also made forays into the private sector, notably a $45 million corporate high-yield bond for Essar Power and a $87 million high-yield sale for newly listed infrastructure and real estate firm Jaypee Infratech.
India’s investment banking community has enjoyed rubbing Citi’s nose in it these past few years. The US bank dominated India’s capital markets for years. Then the financial crisis hit, and Citi struggled. It lost top executives to private equity, doughty veterans to up-and-coming rivals and deals to everyone. Rankings slipped and suddenly Citi looked vulnerable.
Citi isn’t quite back to its dominant best – bankers still leak out in dribs and drabs, while deals occasionally slip away. But another year like the last one, and rivals will again begin to properly sweat. Citi deserves the best equity house award.
Citi did most of the big deals in a year of records. It co-led the country’s largest ever initial public offering, at $3.4 billion, by Coal India, as well as the $850 million QIP by Adani Enterprises, the biggest ever Indian-qualified institutional placement. It led several deals for Tata Group, including Tata Motors’ $756 million differential voting rights sale. And it was one of three arrangers on the largest ever IPO by a micro credit firm, SKS Microfinance.
Morgan Stanley has been something of an outlier in M&A in India in recent years. It participates in many of the bigger stock sales, and is always a reliable partner for the largest Indian firms, but seldom tops league rankings. Perhaps one of the reasons is that many Indian capital market deals (particularly in the public sector) tend to be loss leaders: good for your reputation in India; lousy for your bottom line. Morgan is one of the few advisers that can afford to turn up its nose at some of the more unpalatable public-sector deals.
Historically, then, it has tended to pick and choose deals wisely, and this year that plan has paid off. The US bank’s global reputation as a leading broker of complex, border-spanning deals has put it in prime position as India’s leading corporates expand overseas, seeking to buy prime foreign assets at a competitive price.
Over the past year, Morgan Stanley completed 15 M&A deals worth a combined $30 billion, just ahead of Rothschild and Goldman Sachs, which also had a strong year in India M&A. Deals included most of the year’s big India-geared cross-border transactions, notably a $9 billion deal by BP to acquire oil and gas assets from Reliance Industries and Vodafone spending $5 billion to boost its stake in its India joint venture with Essar Group.
Best bank: Bank Central Asia
Best investment bank: Credit Suisse
Despite the gross level of non-performing loans in the Indonesian banking system remaining stable this year at around 3%, respondents to the annual PwC survey of the sector rated credit risk as their chief concern. Indonesia’s banks, like their peers in many other Asian countries, are growing fast and whenever a bank lends a lot more to a wider network of customers there is the risk that some of those loans will not be repaid. Those concerns aside, the industry was rocked this year by two scandals at Citi, with the arrest of a customer relations manager charged with stealing millions from clients and the death of politician and Citi client Irzen Octa, who had been pursued by external debt collectors. Suffice it to say it was an eventful 12 months in Indonesian banking.
Although no bank stood out from its peers, Bank Central Asia deserves to retain the award it won last year for another year’s strong growth and continuing attention to asset quality. Analysts and rivals still deride the bank as boring and conservative but those qualities have been underrated in global banking in recent years, especially in Indonesia. At the end of the first quarter of 2011, BCA announced an increase in assets of 14.9%, with profits before tax for the quarter up 22.9% year on year and a 26.2% return on equity. The NPL level remained at a healthy 0.7%.
Despite a spirited effort from Deutsche Bank, Indonesia’s top debt house and a growing force in equities in the country, Credit Suisse remains the most successful overall investment bank in Indonesia. Rivals complain that part of the bank’s success is that it works with a fuller range of clients than they are comfortable with, but there is no denying Credit Suisse’s dominance in terms of volume of deals done across equities, debt and M&A in Indonesia. The bank closed an average of 25 transactions, two deals a month, worth over $12 billion. This total does not include the $2.7 billion in private loan deals and the $1.1 billion-worth of offshore equity deals for Indonesian companies. Among the most important of the bank’s deals in Indonesia this year was the $3 billion acquisition by Vallar of a 25% stake in Bumi Resources and a 75% stake in Berau Coal Energy, creating a mining company that owns the largest and fifth-largest coal companies in Indonesia.
Best bank: Citi
Japan secured the admiration of the world for its stoical response to the tragedy of the March 11 earthquake, and the respect of financial professionals for the way in which its markets stayed open throughout the crisis. The country was undergoing another bout of economic difficulty before the disaster, and the subsequent rebuilding efforts, decline in consumption and power outages have only made things harder. Its banks have suffered in turn, with Mizuho Financial Group in particular facing difficulties leading to a long-overdue restructuring decision. With none of the local banks standing out this year, Citi steals in to win the award for best bank in Japan. Although it is not on the same scale as the local big banks in the way it is in markets such as Singapore and Taiwan, Citi is showing stuffy local firms how retail innovation can be done. Its smart banking branches in key locations such as financial district Nihonbashi and transport hub Hamamatsucho are pulling in customers. It has been recognized in the Nikkei’s annual poll as the best retail bank in the country, and its web and mobile phone portals for banking have been a hit. While Citi’s revenues fell in line with the whole sector’s in 2010, Citi Japan improved its tier-1 capital ratio to 24% – much better than any local big bank – and grew its customer base despite the crisis. Shorn of its partnership with broker Nikko Cordial, the bank’s corporate and institutional business has refocused on its core clients and the bank is winning more capital markets mandates.
In meetings rival bankers in Tokyo this year fell over themselves to pour scorn on the joint venture between Morgan Stanley and Mitsubishi UFJ, a sign that they are worried by the new competitor. While the two firms ended up with a dual-company solution as ugly in name as it is in structure (too involved to detail here, but comprising Morgan Stanley and Mitsubishi UFJ and Morgan Stanley MUFG), there are concrete signs that the platform is working. Nomura might dominate the equity capital markets league tables every year, thanks to its unassailable lead and the demise of independent rivals, but Morgan Stanley and Mitsubishi UFJ take the award for best equity house in Japan this year. While the award goes to the joint venture as a whole, it is largely the work of Morgan Stanley MUFG, the part of the alliance with access to Morgan Stanley’s global equities distribution platform. The firm oversaw the return of the convertible bond product to Japan, most notably as the sole bookrunner on the largest such offering in 2010, a $1.216 billion Euroyen CB for micro-motor maker Nidec. It ranked first overall on the convertible bond league table, with a 43.5% market share. MSMS, as the firm is known, also took a joint global coordinator role on the biggest non-privatization corporate IPO in a decade, the $2.5 billion deal for healthcare firm Otsuka Holdings. And it proved both skilled and lucky in completing a follow-on offering for the struggling Shinsei Bank, in a deal that settled on March 13.
Bank of America Merrill Lynch is an anomaly among foreign houses in Japan, choosing to maintain a large sales and origination team across investment banking products at a time when most of its peers are shrinking. Rivals say the platform is unsustainable given the lack of growth in capital markets issuance, but for now the US firm deserves to retain the award for best debt house that it won last year. Highlights included a joint bookrunner role on the year’s standout deal, Panasonic’s ¥500 billion ($6.1 billion) domestic deal, a rare prize for a foreign bookrunner. The banks mandated were those that had done the company’s 2009 deal, plus Bank of America Merrill Lynch, an indication that the firm is regarded as among the foreign houses most committed to maintain a domestic distribution network. The firm was a top house in international debt as well, working on SMBC’s rare euro-denominated 10-year deal, JBIC’s $1.5 billion global bond and Wal-Mart’s well-received samurai bond.
Nomura remains the standard by which Japan’s domestic securities firms measure themselves, and it is the dominant force in M&A as well. While the sheer volume of deals it does in capital markets can sometimes be a hindrance, as it is inevitably involved in many that subsequently underperform or attract regulatory scrutiny, in M&A the firm’s reach makes it the first name on the list for most domestic and cross-border deals. This year it headed the league table, with $79.68 billion from 128 deals. Second-placed Bank of America Merrill Lynch did just 18 deals for a total of $43.41 billion. Among the deals that secured Nomura the award for best M&A house in Japan this year were advising Prudential on the acquisition of AIG assets in Japan, working on a crucial and much-needed consolidation in the life insurance sector between Sompo Japan and Nipponkoa, and an outbound deal for JFE Steel, which took a 14.6% stake in India’s JSW.
Best bank: Shinhan Bank
Shinhan Bank retains the award for best bank in Korea. The industry continues to struggle after the crisis, with net interest margins improving but still low and credit costs high as Korean companies battle difficult economic conditions. Change is coming: Hana Bank looks likely to end the decade-long saga of the sale of KEB by buying the country’s leading FX bank after others, including HSBC, had failed to secure a deal. Amid these distractions, analysts praise Shinhan as having the most clearly articulated model of its peers and the most consistent results. Shinhan, previously among the Korean banks less troubled by corporate governance issues, had a wobble at the end of 2010 with the resignations of the group’s chairman and the bank’s chief executive. However, Moody’s analysts were not alone in concluding that the bank was still on track and that its reputation "as one of Korea’s best managed banks" was justified.
The leading debt house in Korea remains Bank of America Merrill Lynch. The US bank worked on a greater volume of G3 currency and international public deals than any other bank. It worked on an impressive three consecutive deals in this year’s awards period for the country’s leading borrower, Kexim, including 2010’s biggest deal, the $1.25 billion of June 2020 notes. It also showed prowess in helping Korean clients to borrow outside the country with a samurai deal for IBK.
Although JPMorgan did not underwrite as great a volume of equity capital markets deals as some rivals such as Credit Suisse, it deserves the award for best equity house this year for the breadth and quality of the transactions it did work on. Auto-parts maker Mando Corp priced its IPO near the middle of the expected range on May 7 last year, during a period of global market volatility when several other deals were pulled. In ensuring this success JPMorgan became the first ever international bookrunner to work as global coordinator on both the international and domestic portions of a Korean IPO, having underwritten the entire deal. The firm also completed an exchangeable bonds deal for KCC worth $194 million.
Among all the investment banks working in Korea, Bank of America Merrill Lynch has a reputation as a solid adviser on the bigger M&A deals and it deserves the award this year for a typically strong run. It advised Korea Asset Management Corporation on the sale of a 68.15% stake in Daewoo International to Posco, in what might come to be regarded as a landmark privatization deal for the government. It worked for Korea National Oil Corporation on an extremely bold and unusual bid for the UK’s Dana Petroleum, completed despite intensive scrutiny from the regulator and the media of both countries. It was the first time market participants can remember seeing an Asian state-owned company proceed with an unsolicited offer, and the deal sets an interesting precedent. Bank of America Merrill Lynch headed the Korea advisory league table in this year’s awards period, with $13 billion of deals constituting a 19.9% market share.
Best bank: CIMB
In recent years the best bank award has been a two-way fight between Public Bank, which has been excellent at its core businesses for a long time, and CIMB, which has sought to build from its investment banking roots and integrate its various legacy businesses into a more diverse competitor. It is CIMB’s progress with that ambition that wins it the award this year. "While Public Bank is very good at what it does, it is somewhat one-dimensional," says a leading analyst. "CIMB is far more broad-based in its product offering, integrated across sectors and geographies." While CIMB’s success in becoming a regional house is admirable, that’s not what wins it the Malaysia award: it gets it for its impressive across-the-board growth, from retail deposits to wealth management, mortgages to credit cards, business banking to technology and distribution. People admire CIMB for common sense and professionalism, allied with a clear sense of where it is going and what it wants to be.
Comfortably topping the league tables in equity capital markets, debt capital markets and M&A, CIMB is also the leading investment bank in Malaysia. It accounted for more than a quarter of ringgit debt underwriting in our review period; moreover, the bank was active in US and Singapore dollars.
Highlights included a M$600 million ($198 million) sukuk for Trans Thai-Malaysia, $1.26 billion of trust certificates for 1 Malaysia, S$1.5 billion ($1.2 billion) for Khazanah Nasional, and a M$8.8 billion Islamic MTN programme for the government. In equity capital markets, CIMB was on the most important deal of the year – the M$14.8 billion IPO for Petronas Chemicals Group, the biggest ever from Malaysia – as well as the Sunway Reit listing and rights issues or placements for UEM Land and SP Setia, among others. And big M&A mandates included the privatization of Astro AII Asia Networks through a conditional takeover, UEM Land’s purchase of Sunrise, and CIMB’s own purchase of a further stake in Indonesia’s CIMB Niaga.
Best bank: Golomt Bank
While Khan Bank, winner of the best bank award in recent years, remains the leading retail bank in fast-growing Mongolia, it is the country’s companies that look poised to benefit most in the short term from the commodity mining boom. Golomt Bank, which takes the award for best bank in Mongolia this year, is seen by most local analysts as the country’s leading corporate bank, and is also its largest, having grown its assets more than rivals Khan and TDB. The bank, led by chief executive John Finigan, grew its market capitalization from $54 million at the end of 2009 to $107 million as of December 2010, increasing operating profits to $39 million while reducing its non-performing loan ratio from 4.4% to 2.1%.
Foreign investment bankers are descending on Ulaan Bataar in teams to battle – occasionally literally if reports of a punch-up between brawling suits outside the Grand Khaan Irish pub are to be believed – for big IPO mandates as Mongolian miners look for funds to realize their goals. Meanwhile, however, it is the homegrown securities firms with their deeper local ties that are winning friends by developing the equities coverage and offshore funding sources that the domestic market needs to thrive. Eurasia Capital is the largest of them, with 25 professionals in the country and has the largest research team, with eight analysts. In 2010 it advised leading offshore-listed Mongolian resources companies SouthGobi Resources and Prophecy Resource Corp, and has begun to help Mongolia-targeted funds with capital raising, securing $30 million as sole placement agent for Silk Road Human Capital Fund. Eurasia has also been investing heavily in its network in Mongolia, where it has opened the first country-wide branch network, and overseas, where it launched an Emirati subsidiary targeting Gulf investors into Mongolia.
Best bank: MCB
Pakistan’s banking sector is in transition. Some lenders are branching out into new services (for example, United Bank Limited’s ground-breaking mobile platform, Omni, launched last year). Others are struggling to keep their balance as Pakistan’s finances teeter unsteadily on the edge of an abyss, without ever quite toppling in.
MCB is again Pakistan’s standout bank. Well run and with good management, it is a lender with regional clout and with good underlying statistics. "Pakistan is a market that is all about deposits and MCB beats all its competitors there," says a leading Karachi-based investment banker.
MCB’s deposits in the financial year to March 31 rose 7.17%; at its four leading rivals, including UBL, they declined by an average of 3.4%. The ratio of delinquent loans to total lending rose by less than 7% – not a bad figure in such a ragged economy, and much better than for its leading rivals, where NPLs rose by an average of 20%. All its rivals kept full-year dividends flat, while MCB Bank raised its cash dividend by 30%.
Best bank: Metrobank
Last year Metrobank won the award for best bank in the Philippines on the back of its remarkable recovery from the lows of the early part of the 2000s, when the bank’s ratio of bad loans reaching an unsustainable 13.6% in 2003. This year the bank retains the award for building on that progress, going from being a strong turnaround story to an industry leader in its own right. It now boasts the lowest NPL ratio and the lowest absolute volume of NPLs of any bank in the country. In 2010 Metrobank pushed return on average equity from 8.6% to 10.3%, grew its all-important remittance business by 16%, double the industry average, and grew net income from its investment banking subsidiary by 60%. The bank’s progress in growing its assets and profitability during a period when the economy experienced its best rate of growth in 35 years (7.3%), while continuing to improve asset quality, deserves recognition. Analysts covering the Philippines bank sector agree: in January this year Credit Suisse, ATR Kim Eng Securities and Deutsche Bank all rated Metrobank as offering the best combination of value and growth among peers, and in April Citi joined them in rating the bank the best pick in the country.
It was a relatively quiet year for the Philippines across investment banking, with a mix of large offerings for the sovereign and a smattering of equity deals and advisory work. ING had a good showing in M&A as usual, as did Credit Suisse, but it was JPMorgan that showed the most overall progress and the US bank deserves to be named the best investment bank in the Philippines. The firm shot up from ninth to fourth in the debt league tables this year, having won a space on the crucial Republic of the Philippines deals. These included the innovative P44 billion ($1 billion) offshore deal due 2021, and three further deals for the government and related entities in 2011 as the bank capitalized on its success. The bank also topped the equity capital markets league table with just two deals, giving it a 60% market share. These were the Cebu Pacific $622 million IPO, and a role as sole international lead manager for BPI’s P10 billion rights offer.
While JPMorgan claims ING’s overall award for the best investment bank in the Philippines, ING did outperform its US rival in M&A and deserves recognition. The bank was clearly the leading adviser in the country, working on the transformational acquisition by the biggest telecoms company, PLDT, of the third-biggest, Digitel, in a deal with enterprise value of $2.3 billion. Although the deal is yet to close as regulators ponder approvals, ING’s work in bringing two rivals to the table demonstrates its reputation in the country. Among deals it did close, advising SMC on its $1.5 billion Metro Rail project stands out for being a top-tier Philippines client in the new public-private initiative that is slated to tackle the country’s debilitating infrastructure problems. Overall ING topped the Dealogic M&A league table, with five deals worth a 37.6% market share.
Best bank: Citi
Singapore pits two different groups of competitors against one another: the outstanding consumer and commercial presence of Singapore’s home-grown houses, particularly DBS, and the might of flow businesses that foreign houses have built here. The award has shuttled between the two camps for five years now and does so again as it goes, for the third time, to Citi.
Recognizing Citi is first and foremost a reflection of the exceptionally powerful businesses that are based here for the region – all of them market leading and all of them growing fast. Client FX volume run from Singapore totalled $820 billion, up 47% year on year, in 2010. Trade grew 48%, and trade assets by 600%. Assets under custody grew 20% to $192 billion.
Singapore hosts Citi’s world-leading cash management operations for 60 countries and a newly developed commodities business is growing fast. Businesses like this are the reason that Citi is the biggest financial employer in Singapore, bigger than DBS: it has 9,700 people based here.
Is Citi the leading domestic consumer franchise? Clearly not: pretty well everyone has a DBS account, usually opened through the Post Office Savings Bank in childhood. But Citi has an important local presence. Its locally incorporated businesses generate close to S$1 billion ($812 million) in earnings annually; it reaches Singaporeans through 1,350 touchpoints from the 25 branches – many of them built into SMRT bus and train stations – to its ubiquitous payment terminals; it has been smart in using partnerships to reach people, such as through Exxon Mobil and the Dairy Farm Group; and it is a national leader in credit cards. Add Citi’s impressive wealth management operations to the mix and you have a serious local competitor hosting vibrant cross-border businesses.
There are some outsiders that think DBS shouldn’t be considered in the best investment bank in Singapore category, arguing that it is an automatic choice on local deals. Whether or not that’s true, it’s hardly DBS’s fault, and would only be a valid argument if it then messed up the deals it got. It does not, and combines its top league table positions in both equity and debt with strong execution.
It was an ECM year in Singapore, and DBS was on both the landmark deals: the Hutchison Ports IPO (a Hong Kong client, but very much a Singapore deal, using a business trust structure developed by the Singapore Exchange), and Global Logistics Properties. Beyond the headline deals, it was on other important IPOs – Amtek Engineering, Xinren Aluminium, STK OSV – and on secondaries for Ezra Holdings, Spice I2I and Petra Foods.
On the bond side, DBS clearly dominates Singapore dollar deals, leading issues across the yield curve from three years to 40 (a landmark S$1 billion deal for Temasek), but also the big deals in US dollars, some self-led, while others were for interesting issuers such as Indosat and Road King Infrastructure. It’s less of a player in headline M&A, focusing more on smaller deals, but its strength in capital markets is sufficient to carry this award.
Best bank: Commercial Bank of Ceylon
The nightmare in Sri Lanka is just about over; now the rebuilding can begin. In banking terms, the little teardrop-shaped island has huge potential, yet most regional or global retail banks have fled or aggressively scaled down operations, while only a handful of private-sector banks are worthy of mention in this context.
Commercial Bank of Ceylon (CBC) is one of the notable exceptions. Along with Hatton National Bank (HNB) it bestrides what remains of the country’s financial sector, yet CBC wins this award and for good reason. Pre-tax profits rose 31% in the year to end-2010, against 18% at HNB. Assets also rose faster (up 15% versus 13% at HNB), as did total deposits and its market capitalization, which increased by 107% in the year to end-2010, to $840 million.
While HNB is focused on becoming a leading microfinance lender, CBC continues to shore up its balance sheet and capitalize on the island nation’s economic potential. "Post-crisis, CBC is well placed," says a leading banker in Colombo. "They are by far the strongest bank here."
Best bank: Citi
Citi takes the award for best bank in Taiwan for the first time in recognition of the fact that its business there is now a core banking franchise for the group and one that competes on an equal footing with the local banks for corporate and institutional business while out-innovating them in retail. In upgrading Citi Taiwan’s rating to A+ Fitch Ratings noted that the bank has been a top performer in the country for some years, with a consistently improving and peer-beating NPL ratio (0.44% at end 2010) and tier-1 capital ratio (11.99% at the end of 2010 versus 8.13% a year earlier). Citi has made a success of its acquisition of Bank of Overseas Chinese in 2009, and in 2010 it delivered its strongest yet financial results in the country, with the highest earnings before tax of any bank in Taiwan, NT$18.4 billion ($634 million).
As in its other core Asia markets, Citi has rolled out its smart banking concept in Taiwan to much fanfare, and while its futuristic, gleaming white, computer-screen-covered new branches might seem sterile and gimmicky at first there is no denying their effectiveness. Customers are flocking to the bank, and it stole a march on the competition with the nation’s first comprehensive mobile banking and iPhone application in August 2010. The bank has also impressed on the corporate and institutional side, raising $4.93 billion from the capital markets for clients and advising on the successful end of the delayed AIA sale in Taiwan by securing a great price for local client Ruentex.
Taiwan remains a tough market in which to build a sustainable investment banking business. Local securities houses make a living underwriting Taiwanese dollar bonds and selling stocks, but there are few big international deals for the global banks to get excited about. Apart from the sale of Nan Shan, AIA’s business in the country, on which Morgan Stanley had been working on the sell side for some years, this year’s biggest deal was the Want Want/CNS transaction, the largest sponsor exit in Asia Pacific in five years. Morgan Stanley takes the award for the best investment bank in Taiwan, working on the most important deals, winning a 50% market share in completed M&A, and ranking second in equity capital markets as well. The bank also worked as sole bookrunner on the primary GDRs for Wintek in January this year, the largest such deal in Taiwan since 2009. The $330 million deal for the LCD maker won praise from market participants at the time for the speed at which the transaction was closed and the fact that the deal did not appear to suffer from competition with another Taiwanese name in the market at the same time, Farglory Land Development.
Best bank: Siam Commercial Bank
Siam Commercial Bank, Thailand’s oldest, reclaims the award for best bank for its industry-leading results in another year of difficult market and political conditions. Last year’s winner, Kasikornbank, also had a strong showing, continuing the momentum in fee income that snagged it the award with a further 16.8% year-on-year increase.
SCB, however, deserves the win this year for all-round growth and an active approach to tackling risk and bad loans that the ratings agencies in particular found reassuring. The bank followed a strong calendar 2010 in which net income rose 16% year on year and the bank’s market capitalization increased by a fifth with a stellar first quarter this year in which the bank hit a record quarterly profit for the Thai banking sector of Bt13.1 billion ($430 million), as against second-placed BBL with Bt6.5 billion. That meant quarterly ROE of 31.9% compared with second-placed Kasikornbank’s 17.7 %. One spectacular quarter alone does not guarantee an award, but ratings agencies say the bank has not sacrificed prudence in pursuit of profits. In rating the bank’s MTN offering this April, Fitch praised SCB’s strong capital position and leading domestic deposit and loan franchises.
Thailand’s capital markets were more active than usual, and former Merrill Lynch partner turned independent listed broker Phatra Securities gets the nod for best investment bank. The firm topped the equity capital markets league table and was the only local broker in the top five for M&A work. More important, though, was the quality of deals it worked on. Phatra was instrumental in structuring and obtaining ministry of finance support for national airline Thai Airways’ successful Bt15 billion preferential public offering. The deal secured much-needed capital for the struggling carrier, and led to substantial increases in the price of its shares throughout the transaction process.
Among its M&A transactions, Phatra Securities advised Bangkok Dusit Medical Services on its merger with Health Network, a deal that triggered further domestic consolidation as the second-largest and third-largest private hospital groups announced a competing merger. Finally, Phatra Securities established a reputation as the go-to house for overnight private placements, with a series of four transactions from August 2010, each a sole-led deal and each larger than the last.
Best bank: Asia Commercial Bank
Vietnam’s banks expanded at an alarming rate this year, with most lenders quoting profit growth targets in excess of 20% as demand for credit fuelled a big expansion in bank assets. So far there has been no corresponding hangover in the form of a large increase in non-performing loans. However, local analysts are concerned and the government has started putting in credit growth limits amid fears of inflation. Profits are up at all five of the country’s joint stock banks, as well as among state-owned firms and leading foreign banks such as HSBC.
Asia Commercial Bank, a regular winner of this award before Techcombank took it last year through superior growth rates and a clearer strategy, deserves to reclaim its crown. Local brokers cite it more than rivals as a firm with better risk management systems in place, although the government’s attempts to get their people to invest in the dong rather than gold have cramped the bank’s lucrative business in the commodity and slightly dented profits. ACB has the leading market share by deposits of its joint stock peers at 6.27%; the highest pre-tax profits at D3.1 trillion ($150 million) and the lowest NPL ratio at just 0.34%.
Vietnam’s capital markets have long made for spectacular theatre, if little else. They seem trapped in a cycle of rapid growth leading to periods of extreme volatility, stoked by abrupt policy reverses and backfiring attempts to control trading that only make investors more nervous. Nonetheless, foreign banks are starting to take more interest in the country through partnerships with vibrant local brokers. Macquarie signed a cooperation agreement with VinaSecurities in October, and at least one other global bank is close to signing a similar agreement. Credit Suisse has been playing a longer game than most in Vietnam, maintaining a small team in-country since 2001 and publishing regular equity research notes. Although it might have suffered some reputational splash damage from client Vinashin’s default woes, the Swiss firm deserves the accolade for best investment bank in Vietnam for work including a groundbreaking $75 million share-backed financing for Vincom and helping KKR win the hard-fought competition for a 10% stake in Masan Consumer. Immediately after the Euromoney awards period ended the bank was mandated by the government to work on the sale of state-owned Vietcombank, suggesting that Credit Suisse is starting to see a return on its years of investment in Vietnam.