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Citibank and HSBC battle it out to be the best pan-Asian bank.Morgan Stanley Dean Witter succeeds in M&A and HDFC Bank had a great year in India. Kathryn Hanes

Best domestic bank: Industrial and Commercial Bank of China

Best foreign bank: HSBC

Best foreign bond house: Merrill Lynch

Best domestic equity house: CICC

Best foreign equity house: CLSA

Best domestic M&A house: Bank of China

Best foreign M&A house: Morgan Stanley Dean Witter

HSBC has been touting 2000 as its year for "going home" to China. In April it opened its mainland headquarters in Shanghai, relocating the management of the bank's mainland business out of Hong Kong, addressing a long-standing criticism of the bank's China business. Today, HSBC has nine branches in China, employing about 800 staff. And its renminbi business is starting to grow, thanks to securing a Rnb3 billion ($360 million) line of credit from the Bank of China on which it can draw to make loans to yuan customers (given the restrictions on foreign banks in terms of number of branches and customer base, HSBC had been unable to fund its loan book from deposits). It has also signed an agreement with ICBC that will allow customers to use ATM cards issued in Hong Kong to withdraw yuan and check account balances. And, in May it sealed yet another alliance with one of the big four state banks, under which it will be allowed to use China Construction Bank's 7,000-branch network to transfer yuan to customers.

Standard Chartered, one of HSBC's closest rivals in China, has also been hitching itself to local players. To overcome the challenge of funds transfer around the mainland, Standard Chartered became the First foreign bank to sign up to the People's Bank of China's electronic settlement system. Along with Citibank, Goldman Sachs and Morgan Stanley Dean Witter the bank remains a worthy competitor to HSBC, particularly in corporate banking.

Demand has been high for a few select corporate deals out of China. At the end of October, China Telecom did a simultaneous $2 billion equity offering through Bear Stearns, Goldman Sachs and China International Capital Corp, and a $600 million Five-year bond deal led by Bank of China International, Chase and Merrill Lynch into highly discriminating markets. Just two weeks earlier the $2.5 billion IPO of China National Offshore Oil Corp had been pulled.

As an equity house, Credit Lyonnais Securities Asia (CLSA) rates highly among investors in China, in part for its ability to guide clients through the labyrinth of China's two stock exchanges, where shares are divided into two broad though vague categories of untradable and tradable. CLSA's securities research is consistently well regarded.

Restrictions remain on the foreign banks' operations in equity brokerage in China. So the most competitive area is the international trading of Chinese equities. CLSA is leading foreign coordinator and bookrunner on China equity issues. In July last year it was global coordinator, sole lead manager and sole bookrunner on the $245 million China Resources Enterprise share placement. Of course, the big foreign equity underwriters in China are still JP Morgan and Goldman Sachs. However, the equity offerings out of China are privatizations and the government, keen to avoid picking favourites among the foreign banks, ensures the deals are shared out evenly.

For the local Chinese equity houses, building a reputation is a hard slog. Most issues that come to market in China are just small chunks of state-owned enterprises that are being floated, and the government tends to parcel out these deals evenly among the local banks.

The only way a local bank can distinguish itself in equity is by taking Chinese companies offshore. CICC is China's leading local bookrunner on international equity offerings. Earlier this year it helped close the PetroChina deal, which it joint managed with Goldman Sachs. PetroChina was the largest offering in the Hong Kong market in the First quarter this year.

Morgan Stanley Dean Witter picks up this year's corporate Finance award in part through its relationship with CICC. Morgan Stanley Dean Witter and CICC have advised China Telecom on its acquisition of three telecom companies in China for $6.4 billion. In its own right, Morgan Stanley Dean Witter was also the adviser to United Biscuits on the sale of its China operations to its shareholders in the US and the adviser to Asia Pulp&Paper on the sale of its China power assets to Singapore Power for $197 million.

Hong Kong
Best domestic bank: Bank of East Asia

Best foreign bank: HSBC

Best equity house: Goldman Sachs

Best debt house: HSBC

Best M&A house: Morgan Stanley Dean Witter

Best local securities house: Tai Fook

HSBC is so dominant in the Hong Kong market that it's nearly impossible for any other foreign bank to knock it off the top spot. It is the largest bank in Hong Kong, with 220 branches, and is one of only three note-issuing banks.

Last year it issued 65% of all new banknotes.

It offers the full spectrum of banking services and products, from treasury and capital markets to transactional services, trade services to private banking, fund management to insurance. It is elephantine in the local consumer banking market, with more than 75% of the adult population maintaining accounts with HSBC.

HSBC is also the major player in the local debt market. From June 1999 to May 2000 it underwrote 121 Hong Kong dollar issues for both local and foreign credits for a total value of US$5.6 billion. Last year it worked with Morgan Stanley Dean Witter on the largest pure Eurobond from the region, which was also the year's biggest single-tranche offering from Hong Kong. The 10-year US$1 billion deal for Kowloon-Canton Railway Corporation closed two-and-a-half times oversubscribed and increased First from US$300 million and then from US$500 million.

Meanwhile, the local Hong Kong dollar bond market continues to fare well. It received a sizeable boost during the Asian crisis when stock markets fell 50% or more, inflation rates went to zero and interest rates rose.

Bonds suddenly became interesting. Hong Kong has been backing the development and diversification of its own local-currency bond market. One key institution has been the Hong Kong Mortgage Corporation, loosely modelled on the American federal agency Fannie Mae. Over the past 12 months the number of issues, and range of issuers and maturities has continued to grow. HSBC remains the biggest market maker in the Hong Kong dollar money market. It is also the primary dealer of government debt securities. Some of the bank's notable Hong Kong dollar deals include the largest single-tranche fixed-rate issue - a HK$3 billion, three-year Fixed-rate note for EIB, and the First Hong Kong dollar Australian utilities bond.

Goldman Sachs still dominates the equity market. It was one of three banks to help the Hong Kong government decide on a disposal strategy for its equity portfolio. During the Asian crisis, the Hong Kong government broke with tradition and spent US$15 billion (HK$117 billion) from official reserves propping up the local share market. When it decided to unload all but 5% of its stock market portfolio it set up a company, Exchange Fund Investment Limited, and appointed a three-member advisory panel, through Goldman Sachs (Asia), ING Barings Asia and Jardine Fleming Securities.

The panel finally agreed to create a unit trust product tracking the index with the new fund sold off to investors. The public listing of the fund at US$4.3 billion was Asia's biggest public offering and it was three times oversubscribed. On its First day of trading, it was up almost 10%.

Morgan Stanley Dean Witter maintains the broadest M&A franchise in Hong Kong. Although Goldman Sachs tops the league tables in transaction volume, Morgan Stanley Dean Witter is recognized as the leader in complex and innovative transactions. It was involved in several significant M&A deals out of Hong Kong over the past 12 months including HSBC Holding's purchase of 75% of Bangkok Metropolitan Bank (on which it advised the Thai bank) and the $560 million group restructuring involving HKR International and Mingly Corp.

Of the local players, Bank of East Asia is the best all-round commercial bank. Hang Seng Bank, which is 64% owned by the London-based HSBC Group, is not eligible as a local player.

East Asia's strength is its domestic retail business, although it has been expanding its commercial and corporate banking operations.It is the best local bank for foreign-currency deposits, transactions and margin trading. It also operates a good trade Finance and bancassurance business.

Best domestic bank: HDFC Bank

Best foreign bank: HSBC

Best domestic bond house: SBI Cap

Best foreign bond house: ABN Amro Securities (India)

Best domestic equity house: DSP Merrill Lynch

Best foreign equity house: Jardine Fleming

Best domestic M&A house: DSP Merrill Lynch

Best foreign M&A house: Morgan Stanley Dean Witter

Domestic and foreign banks alike are moving aggressively to build their loan books in India in response to changing attitudes toward borrowing. It is forecast that by the end of this year almost 40% of people will obtain home loans from their banks, compared with 30% from their employers and 11% from family or friends. Foreign banks that only a couple of years ago did not have a single loan product in India today offer a full range of products.

The country's leading foreign bank is HSBC, which runs a loan book of almost $250 million and has issued about 300,000 credit cards. However, foreign banks have only about a 6% share of India's consumer Finance market, which remains dominated by the more savvy of India's private sector banks, such as HDFC Bank and ICICI Bank. HDFC, which has successfully taken over Times Bank, posted an exceptionally strong performance for the financial year 1999-2000. Total deposits increased by 189% to Rs84.28 billion ($1.9 billion), while savings accounts deposits grew 224% to Rs11.25 billion. The bank's loan book also was up from Rs14.01 billion to Rs33.62 billion, growth of 140%, and net non-performing assets were down 0.77%.

HSBC also reports that the number of its consumer accounts grew by 30% from 460,000 in 1998 to more than 600,000 in 1999. HSBC has a broad presence in India, with 26 consumer-banking offices, four offices for HSBC Securities&Capital Markets, and an office for HSBC Private Equity. Its balance sheet stands at US$2.6 billion. In treasury, HSBC is a leader with the strongest foreign exchange business (dealing in 25 currencies) and one of the biggest dealing rooms in India, while in trade services it handles about 3% of India's annual trade. In the capital markets too HSBC stands out, having placed Rs50 billion worth of primary and secondary debt last year. It is also the largest custodian of foreign assets, accounting for about half that market of total foreign institutional investor business, although Citibank leads the market in clearance.

But like all leading local and foreign banks in India, HDFC and HSBC face bigger competition with consolidation in India's banking sector, reflecting broader consolidation in the local economy. The growth in the M&A market has been a boon for business at Morgan Stanley Dean Witter and DSP Merrill Lynch, a local player that is 40% owned by the American bank. DSP Merrill Lynch, like its nearest foreign competitor in the equities market Jardine Fleming, is picking up some impressive equity mandates off the back of its M&A advisory work.

It has also been a busy year for both the local and foreign banks in the domestic debt market. Although international debt issuance out of India has been slow for two years, the market for rupee debt is strong. SBI Cap, the First local player to introduce dutch auctions and floating-rate debt to India, has led a clutch of deals for clients including ICICI, Industrial Development Bank of India and Tata Finance. SBI Cap's closest foreign competitor, ABN Amro Securities, has an equally impressive clientele of top Indian corporates. Some of its repeat clients include GE Capital, Mahindra&Mahindra, Tata Steel, and Reliance Industries.

Best domestic bank: Bank Central Asia

Best foreign bank: Citibank

Best foreign bond house: ABN Amro

Best foreign equity house: Jardine Fleming

Best domestic M&A house: Danareksa

Best foreign M&A house: Lehman Brothers

Best local securities house: Danareksa/Bahana Securities (tie)

The Indonesian debt market is considered by many strategists to be one of the riskiest in the region. But there are opportunities. The domestic debt market is predominantly made up of central bank paper; about Rp72.7 trillion ($9.9 billion) is outstanding while corporate bonds outstanding total some Rp15.6 trillion.

Last year, the government issued Rp260.6 trillion as part of its bank recapitalization programme. The bonds were not issued into the market but were directly placed with banks in exchange for stock.

Although no foreign houses in Indonesia have been able to access the international bond markets, there have been a few significant deals in the emerging rupiah bond market. ABN Amro worked on a major bond issue for Sampoerna and has also been active in the secondary debt markets. Along with Citibank, ABN Amro is best placed to take the lead in the international debt markets when they open again to Indonesian credit.

The equity market also remains quiet, although Jardine Fleming (now part of Chase) is still active as a broker and the best equity research house. CSFB is still in the market as well. It was the lead manager in June last year on Indofood's $285 million equity placement.

The secondary capital markets are still dominated by Danareksa Securities and Bahana Securities. The two houses, both owned by the government, were the underwriters on the only deal of any substance in the past 12 months, Ibra's listing of 22% of Bank Central Asia (BCA). Both houses also helped Ibra reach agreements with the owners of Five failed banks to deliver Rp96 trillion ($12 billion) worth of companies, shares and other assets to settle the debt to the government left behind when the banks collapsed. In the local debt market, Danareksa and Bahana have been the most active traders and underwriters of government debt, picking up most of their work from the government's issuance of Rp260.6 trillion as part of its bank recapitalization programme.

Danareksa has also become more active in corporate Finance, where it has joined Lehman Brothers as an adviser on corporate and government restructuring. Lehman, along with CSFB, has been involved in most of the significant transactions in Indonesia over the past 12 months. It worked on the largest bank IPO ever in Indonesia; the sale of Indonesia's largest independent conglomerate, Astra; the market's largest M&A transaction ever, Ibra; and the First major corporate debt restructuring, Danareksa.

Despite the poor state of the commercial banking market, Citibank and ABN Amro are sticking by it. Citibank's consumer bank has more than 900,000 customers and the biggest share of the local credit card business, and it has relationships with more than 75% of all multinationals in Indonesia through its commercial banking business. Citibank is also a leader in cash management and collections and is engaged in trade Finance, treasury, structured Finance and investment banking.

Last year, no local bank was awarded the title of best commercial bank. They were all too sick. This year, however, Bank Central Asia deserves recognition. Although no Indonesian banks are yet through their transition period, BCA is closest to the end. It was the first and only bank to turn in a profit in Q1 2000.

In April the government sold 22% of BCA to the public for $109 million, the biggest sale of banking assets since it shut more than 60 lenders crippled by the crisis. The capital-raising exercise means BCA is likely to emerge as a reliable Indonesian bluechip when the market recovers.

Best domestic bank: Shinhan Bank

Highly commended: H&CB

Best foreign bank: Citibank/Deutsche Bank (tie)

Best domestic M&A house: Hana Bank

Best foreign M&A house: Lehman Brothers

Best local securities house: Samsung Securities

Best foreign securities house: Merrill Lynch/Deutsche Bank (tie)

Although South Korea's bond market is the second largest in Asia after Japan's, it hardly behaves like a market at all - the secondary bond market and sovereign bond issuance are virtually non-existent. However, the volume of corporate bonds has been growing over the past six months following a fall in total issuance during 1999 because of the inability of Daewoo, Korea's most prolific issuer, to tap the market. Corporate bond issuance could expand by as much as 20% this year.

Best positioned to take advantage of this growth in the securities market is Samsung Securities, which for two years in a row has grown its market share by more than 5%.

Samsung is Korea's leading broker and one of only four domestic securities companies to have received the top AA rating from the Financial Supervisory Board for management performance.

Merrill Lynch is also well placed to cash in on an upswing in the debt markets. It is an all-round good performer in local and international primary issuance, secondary-market trading, and research. In the primary markets, it was the joint lead-manager on Industrial Bank of Korea's $350 million Eurobond offer and it also arranged Salco's $155 million asset-backed issue.

Merrill is also well regarded for its research and execution capabilities in the equity market, where privatization has been accelerating with big names like Korea Telecom and Korea Tobacco all coming to market in the past 12 months. In June last year, Merrill joined Salomon Smith Barney as bookrunner on the giant Pohang Iron&Steel offering.

SSB's strengths in M&A and investment banking contribute in part to Citibank securing this year's award as equal best foreign commercial bank. Citibank offers the full range of banking services and products in Korea and has engaged a wide clientele, including government agencies, top-tier corporates, multinationals, local corporates, SMEs and retail customers.

But, despite being the biggest foreign bank by assets and profits, Citibank is in danger of being overtaken by Deutsche Bank. Deutsche is the client's choice in foreign exchange (according to Asiamoney); has between 30% and 40% of the forward and options markets; is top-ranked underwriter of Korean debt in the international bond markets and was joint lead-manager this year on Hanaro Telecom's Nasdaq listing for the sale of 24 million new shares ($372 million) in the form of American depositary receipts.

It is currently mandated as a joint
lead-manager by Korea Asset Management Corporation to launch the First major international securitization issue from a Korean issuer.

Deutsche also claims to be the top bank in Korea for offshore Fixed-income trading clients with over 50% market share of local KRW-denominated bonds traded with offshore investors as well as the number one foreign Fixed-income house in Korea for Korean clients; highest volume with Korean investors, with an equivalent of $59 billion traded in this year alone.

Lehman Brothers also offers Citibank a sizeable challenge in corporate Finance and, notably, M&A. Lehman was the exclusive Financial adviser to Hanvit Bank and Hanvit Securities in the sale of Hanil to Seoul Securities in a deal valued at $60 million.

The bank has also invested $150 million with Korea Asset Management in a joint-venture corporate restructuring company, which will take over and inject funds into companies in need of restructuring, and resell these after turning them around.

Like the country's industrial conglomerates, Korea's banks still have problems. Korea has one of the most fragmented banking sectors in Asia, with 17 commercial banks, and the competition is reducing profits. But a few banks stand apart from the wreckage, including Hana Bank, Kookmin and H&CB and, most notably, Shinhan Bank. Indeed Shinhan is one of the strong local banks that have been required to buy weak provincial banks (but the small size of the troubled banks has not affected the operations of Shinhan).

Even more consolidation is expected this year as the local banks continue to struggle with bad loans and large losses. The government has now exhausted its W64,000 billion ($57.6 billion) bank bail-out fund after nationalizing the biggest banks, including Hanvit, Cho Hung, SeoulBank and Korea Exchange, to save them from collapse. Stricter accounting rules are forcing banks to increase provisions for loan losses, which is threatening their capital base. And they have problems issuing new shares to raise more capital since their share prices have dropped sharply. The government, which now controls most of the banking industry, says it will leave it up to market forces to determine the banks' fate. Most analysts, however, believe the government will intervene.

Best domestic bank: Maybank

Best foreign bank: Citibank

Best domestic bond house: Aseambankers Malaysia

Best foreign bond house: Deutsche Bank

Best domestic equity house: Aseambankers Malaysia

Best foreign equity house: Jardine Fleming

Best domestic M&A house: Commerce International Merchant Bankers

Best foreign equity house: Morgan Stanley Dean Witter

By the end of 1999, the Malaysian economy was showing strong recoveries in economic growth, trade balances and foreign-currency reserves.

Interest rates have also returned to single digits following the surging inflation that accompanied currency devaluation in 1997. The current account has benefited and foreign exchange reserves have been rebuilt. The result is a boom in the stock market, up nearly 70%.

There were 21 IPOs in Malaysia last year and although CIMB managed the greatest number, seven, Aseambankers took the largest share in terms of amount raised from the three IPOs it managed, raising more than M$600 million.

Aseambankers, the merchant-banking arm of Maybank, was also the bookrunner on Five major offshore equity offerings for local corporates, including UDA Holdings, Malaysian Airports Holdings, Hunza Properties and Analabs Resources.

Aseambankers is also the local leader in Malaysia's ringgit bond market, although the market remains a weak link in the country's capital market development. Although total outstandings in the bond market are almost twice those of Thailand, trading was almost half that of its neighbour in 1999 - something the Malaysian authorities have now resolved to do something about.

Corporate bonds totalled M$96.537 billion, or 45% of outstandings, but accounted for almost half of the M$25.9 billion of trading in the past year. Long-term government securities represented just 16% of trading and Cagamas, the national mortgage corporation, issues around a quarter.

Regardless of the state of the bond market, it is still one of the most hotly contested arenas among the foreign banks. This is where Deutsche Bank, HSBC and Citibank battle it out. Leaving aside commercial paper and medium-term notes, some of the more significant recent deals include the YTL Power International M$750 million Fixed-rate bond in January, which was two times oversubscribed.

Deutsche was the lead-manager on the deal. As part of the fund-raising exercise, Deutsche Bank also arranged a M$250 million MTN programme for future issuance.

On the equity side of the market Jardine Fleming, which since the forced merger of the country's brokers combines Pesaka Jardine Fleming, JF Apex Securities and JF Apex Futures, has completed one of the most important transactions out of Malaysia. It was the bookrunner on Malaysian Pacific Industries' 5 million share issue, worth about US$60 million. It was the country's First foreign placing in three years and the only one since the introduction of capital controls.

M&A work in Malaysia largely remains the preserve of foreign banks, namely Morgan Stanley Dean Witter and ABN Amro, but one local bank is gaining ground. CIMB is the merchant banking arm of the newly merged Bumiputra-Commerce Bank, which is owned by Malaysia's second largest Financial conglomerate, Commerce Asset-Holding. Last year it was a manager on the merger of Bank of Commerce with Bank Bumiputra Malaysia, and Malayan Cement's acquisition of a 50% stake in Associated Pan Malayan Cement and 65% in Kedah Holdings.

But CIMB is still no match for the mighty Maybank, the country's local leader in corporate, commercial and consumer banking.

Few local banks come close to Maybank.

With more than a 20% share of the market, it is the leader in trade Finance. It is the only local bank offering both sub-custody and global custody services. Now it's building its retail strength, although it already has more than 400 branches and more than 4 million retail customers. In May, the bank signed a RM40 million deal to purchase 680 self-service terminals, 250 ATMs and 180 cash deposit, 150 cheque deposit and 100 passbook update machines.

That's in addition to its existing 796 ATMs.

It also recently took over PhileoAllied Bank, Aseambankers, Sime Bank, Kewangan Bersatu and Pacific Bank.

Maybank competes keenly with both HSBC and Citibank, which over the past 12 months has seen its loan book grow by 24% (compared with only 2% the previous year) and its total asset base grow by 14%. Although Citi's asset base is still much smaller than HSBC's, it is a leader in derivatives, risk management and foreign exchange, both in size and market sentiment. Citibank also has the biggest credit card, mortgage and telebanking business of any of the foreign banks, and its credit card receivable volume is six times greater than HSBC's.

Best domestic bank: Muslim Commercial Bank

Best foreign bank: ANZ Grindlays

Best domestic securities house: Jahangir Siddiqi

Best foreign securities house: CAI WI Carr

Best domestic M&A house: United Bank

Best foreign M&A house: Citibank

The military government, which came to power in a bloodless coup last October, is expected to soon offer up to 10% of stock on the Karachi market of the National Bank of Pakistan - one of the three largest public sector banks. The response would be a crucial test of the market's confidence in the government and the country's banking sector.

So far, the new regime has had time only to talk, and in some cases act, tough on the problem of non-repayment of loans by those who are able but unwilling to pay.

Pakistani banks are operating with a low capital base if viewed in dollar-terms, and the country's financial managers are stressing capital adequacy to meet global challenges.

Meanwhile, the central bank is urging small banks to merge, fearing many run the risk of failure and collapse.

Pakistan is overbanked for its size. According to central bank figures, Pakistan has 25 domestic commercial banks, 20 foreign-owned banks, 10 development Finance institutions, 16 investment banks and 32 leasing companies. The paid-up capital of all these institutions comes to less than 94 billion rupees ($1.8 billion), equivalent to only 2.8% of the country's gross domestic product.

In April Standard Chartered pulled off the biggest acquisition among the foreign banks by buying Grindlays, once the banker to Britain's civil servants. The acquisition from Australia and New Zealand Bank (ANZ) will make Standard Chartered the biggest international bank in Pakistan by assets. But the deal is still subject to regulatory approval and is not likely to be completed until the third quarter of this year.

Meanwhile, ANZ Grindlays remains the strongest foreign bank in Pakistan. It provides a broad range of commercial and investment banking services but distinguishes itself in retail banking where it is the biggest foreign provider of credit cards. However Muslim Commercial Bank, a local player, has a much bigger share of the consumer banking market.

MCB, which has been privatized the longest of Pakistan's banks, is the leading local provider of credit cards and travellers cheques, although it has a smaller asset base than its nearest competitor, Habib Bank.

Habib has been shifting its focus away from consumer banking to build its commercial and corporate banking business, an area where United Bank is relatively strong.

United's treasury and corporate Finance businesses have been growing under the guidance of foreign bankers who have been seconded to United, most recently Citibank's Sujit Banerji. Now back at Citibank, Banerji oversees the country's most successful foreign corporate Finance house. The largest foreign player in custody and cash management, Citibank also runs a successful investment banking and M&A business, and is the leading foreign provider of securitized and structured products. Citi, with a capital base of $80 million, is also active in consumer banking, where it offers multi-currency credit cards.

Citibank, however, does not have a name in the securities market, an area where Credit Agricole Indosuez WI Carr dominates, along with Jardine Fleming and ABN Amro. Jahangir Siddiqi is the foreign brokers' strongest local competitor, followed by GKD Securities and Habib Bank.

Best domestic bank: Equitable PCI

Best foreign bank: Citibank

Best foreign bond house: HSBC

Best foreign equity house: ING Barings

Best domestic securities house: Wealth Securities

Best domestic M&A house: BPI

Best foreign M&A house: ING Barings

It has been another difficult 12 months for banks in the Philippines. In further moves to consolidate the Philippines' banking industry, the government and Lucio Tan, a local tycoon, had planned an auction of their combined 80% stakes in Philippine National Bank, clearing the way for privatization of the debt-ridden bank. In June the auction was scrapped when only one bidder emerged.

The cancellation is another severe embarrassment to Joseph Estrada, president of the Philippines, who had hoped to use a successful auction to boost the country's standing with international financial institutions. It has also given rise to the prospect of Tan buying the government's stake, fuelling renewed concern over cronyism within Estrada's administration and the local banking industry. Tan is a close friend and supporter of the president.

The collapse of the sale is also a blow to Rafael Buenaventura, the central bank governor, who has said that the Philippines needs three or four strong local banks that could become regional, and then global, groups. To achieve this, he predicts that soon only four lenders will control up to 60% of bank assets.

Equitable PCI is one of Buenaventura's three-member dream team. It is the Philippine's second-biggest bank by total assets but it has the highest capital adequacy ratio (18.06%) and one of the lowest levels of non-performing loans. It is also the biggest local trade Finance bank and has the largest foreign-currency business of the local players. As a key local bank in the consumer market, Equitable PCI has the third-highest market share of total deposits and the third-largest retail branch network. It dominates the local credit card business.

Its nearest competitor is BPI Bank, which is a strong performer in corporate Finance work.

BPI is the Philippines' third-largest bank, owned by the 166-year old Ayala conglomerate.

In 1999 BPI won a three-way takeover battle for Far East Bank, the country's fifth-largest lender, which is 25% owned by Sakura Bank of Japan. The merger will create the nation's biggest and most profitable lender, with assets of Ps355.4 billion ($8.3 billion). BPI is already the most technologically advanced bank in the Philippines and is to further develop into internet banking. In recognition of BPI's potential, Development Bank of Singapore recently bought a 19.7% stake.

But BPI and Equitable PCI are no match for the foreign powerhouses in the Philippines: Citibank, HSBC, ING Barings, JP Morgan and ABN Amro. Citibank is the largest foreign bank in terms of assets, revenues, customers (700 active corporate accounts), employees (1,300) and number of branches. It is strong across the whole range of banking products and services - project Finance, custody and clearing, fund management, derivatives and risk management and e-commerce. It is also the largest foreign-currency deposit holder and lender.

Citibank's keenest rival, HSBC, dominates the local bond market. It led the Fixed-rate corporate note facility for PLDT, which was hailed as marking the birth of a Philippines bond market. The First peso-denominated Fixed-rate offering by a local corporate, it was a benchmark issue. HSBC ended the First quarter this year with a 62% market share of the domestic corporate bond market.

In the equity market, ING Barings takes the lead, having led several successful issues in poor conditions as well as the only peso-convertible deal in 1999, which was four times oversubscribed. Merrill Lynch and Jardine Fleming are active in the secondary markets, where JF has about an 8% share of market trading volumes. Its nearest local competitor is Wealth Securities, which has a market share of about 5% of the local brokerage business.

ING is a top performer in corporate finance and M&A advisory. Although ING comes in second to JP Morgan in M&A transaction volumes over the 12 months to May 1 2000, ING has been involved in several significant deals.

With ABN Amro, it worked on one of the largest Asian telecom mergers ever (PLDT and Smart) and one of the largest M&A deals last year in the Philippines. It also advised on the largest equity infusion in the Philippines by a foreign partner, $1.4 billion by NTT into PLDT.

Best domestic bank: DBS

Best foreign bank: Citibank

Best domestic bond house: DBS

Best foreign bond house: Citibank

Best foreign equity house: Citibank

Best domestic securities house: DBS

Best domestic M&A house: OUB

Best foreign M&A house: CSFB

Local government-controlled bank DBS dominates financial services in Singapore. It is the market leader in Singapore dollar loans and deposits, which were up to S$82 billion at the end of last from S$S74 billion in 1998. The bank also saw its operating profit increase 75% to S$2billion in 1999 from S$1.1 billion in 1998, while net profit grew an impressive 857% to S$1.1 billion in 1999 from S$112 million the previous year (although much of the growth in profits is attributable to the takeovers of POSBank and Kwong On Bank in Hong Kong). DBS leads in most banking products and services, with the possible exception of M&A advisory where OUB has managed to build a stronger presence among the local AA rated companies and mid-tier companies across south-east Asia.

"There's no other way of looking at it, DBS is just a banking gorilla," says the country head of a foreign bank in Singapore. And the gorilla's strength is likely to be reinforced as consolidation accelerates. Singapore has five local banks. But the government is pushing local banks to merge with each other and senior officials have been public in their belief that there is room for no more than two locals, probably DBS and OUB. DBS Bank has already merged with two banks, and the market is now waiting to see whether others follow suit. In particular, speculation surrounds OUB and OCBC.

The smaller banks are also starting to feel the squeeze from foreign banks. In a tentative bid to prise open the closed financial centre, the government has decided to open Singapore up to more foreign banks. It hopes this will encourage its own institutions to become more competitive. Last year the government allowed four foreign banks - ABN Amro, Banque Nationale de Paris, Citibank, and Standard Chartered - to have "qualifying full banking licences". The new foreign licences have come at a time of severe competition for business, high capital requirements and poor loan growth for the local banks. The need to set aside large loan loss provisions is lessening as the Asian crisis abates, but the government continues to impose high capital requirements on its local banks. Currently, a minimum 10% ratio is required for the core tier one capital.

While the consolidation could further bolster DBS's position as the country's leading commercial bank and OUB's position as its leading corporate Finance bank, Citibank could find its position under attack. Citibank is the overall foreign leader through its subsidiaries Citibank Corporate Bank, Consumer Bank, Private Bank, International Personal Banking, SSB and SSB-Citi Asset Management.

But the new foreign bank licences allow Citibank's nearest competitors, ABN Amro and Standard Chartered, to make an assault on the consumer market by reorganizing their branch structures and installing ATMs. Two more licences will be granted this year, with the speculation centring on HSBC and Maybank. The choice of names depends heavily on the government's assessment of the contribution of these institutions to Singapore's overall marketplace.

Best domestic bank: Chinatrust

Best foreign bank: Citibank

Best foreign bond house: Citibank

Best foreign equity house: ABN Amro

Best domestic securities house: Capital Securities

Best domestic M&A house: Chinatrust

Best foreign M&A house: Citibank

Taiwan's powerful economic growth and importance in world trade is making it an increasingly attractive and competitive market for international bankers.

In April, Citibank announced a strategic partnership with Fubon. Citibank will invest $750 million to acquire 15% in the Taiwanese corporate group's financial services operations, which include Fubon Commercial Bank. Overseas investors can only own up to 15% of shares in Taiwanese banks, but there have been suggestions that the limit could be raised to 20%. Officials of the new government inaugurated in May have expressed support for further liberalization.

Citibank's Fubon deal was quickly followed by an announcement from Standard Chartered, the UK-based banking group, that is was targeting Taiwan as it continues its buying spree in Asia.

It is increasingly focusing on consumer business in emerging or newly emerged markets.

But having suffered the greatest losses of any foreign bank in 1999, ending NT$803 million ($26 million) in the red, Standard Chartered is not a great threat to Citibank's dominance.

Citi faces its only real competition in equity capital markets where ABN Amro, UBS Warburg and Jardine Fleming do battle. ABN Amro's traditionally strong lending position among foreign institutional clients, as well as the domestic institutional investor market that it has recently muscled into, give it a total 15% share of the equity market. In 1999 it was the bookrunner on $739 million worth of deals, 23% of the total issued by foreign securities houses. It is also strong on the brokerage side, executing trades worth NT$272 billion last year and grabbing about 15% of the secondary market.

Citibank too is going from strength to strength in Taiwan's liberalizing bond market - the Securities&Futures Commission has said that foreign funds would be allowed to trade in domestic convertible bonds. The role of foreign investors in the Taiwan market was previously limited to buying and selling corporate bonds.

But questions remain over whether foreign institutions will want to play a larger role in Taiwan's bond market. Key issues are the inability to hedge positions because there is no local bond futures market, secondary market illiquidity, and the fact that the marketplace is so crowded with local securities houses that fees are threadbare.

Capital Securities is the leading local equity and debt house in Taiwan. It operates one of the country's four biggest investment and trust funds and recently absorbed four other brokerage houses. In April, it joined three other Asian brokers to form a cross-border online trading network. The other partners are Japan's Aizawa Securities, Korea's Dongwon Securities and regional investment bank Japan Asia Securities.

Outside the securities markets, the local banking leader in Taiwan is Chinatrust. In April, chairman Jeffrey Koo announced that the bank was looking to acquire medium and small-sized banks in Europe, with a view to developing a global internet bank. Koo also confirmed that the bank would start online banking services from early June.

In May he announced that Chinatrust was willing to spend NT$5 billion to NT$6 billion to establish ATMs at 7-Eleven outlets, and in early June he confirmed the bank was finalizing details on the acquisition of "several" domestic banks by the end of the year. Rumours continue to circulate in Taipei that the bank is about to take over Bank of Overseas Chinese.

Best domestic bank: Thai Farmers Bank

Best foreign bank: Citibank

Best domestic bond house: Thai Farmers Bank

Best domestic equity house: Asset Plus

Best foreign bond house: Merrill Lynch

Best foreign equity house: ABN Amro

Best domestic M&A house: Thai Farmers Bank

Best foreign M&A house: Standard Chartered

By the end of last year Thailand's economy was showing strong recovery in growth, trade balances and foreign-currency reserves.

Interest rates have now returned to single digits following the surging inflation that accompanied currency devaluation in 1997. The stock market is up 20%.

This is good news for equity houses. ABN Amro is the dominant foreign player in the secondary market for equities. It ended 1999 with a market share of 9.5% - its highest ever share of the market.

It has a strong institutional and retail business, unusual for a foreign broker, and operates out of 18 branches. Jardine Fleming, which has become an active broker through its acquisition of local securities house Thanakom, is also well regarded for its research, sales and execution capabilities, along with local player Asset Plus.

The debt markets have been equally active.

Riots broke out at a government bond auction in January when Bt10 billion ($280 million) of longer-dated paper was issued and 2,500 people turned up in person to buy it. Even though the Bank of Thailand is putting pressure on banks not to lower deposit rates for social reasons, rates - particularly at the foreign-owned institutions - have fallen to record lows.

This has driven savers eager for higher-yielding paper to desperate measures.

Thai Farmers Bank, Bangkok Bank and Bank of Asia are the leaders in the local debt market.

Thai Farmers still picks up the bulk of business based on its historical role in the local market.

Thai Farmers was the first Thai commercial bank to arrange corporate debentures, underwrite secured debentures, and arrange bills of exchange bidding programmes. It was also the First to introduce short-term debentures and it leads the market in underwriting state enterprise bonds.

Merrill Lynch is Farmers' closest foreign competitor. It tops the charts in terms of number and volume of deals through its investment in Phatra Securities. In 1999 and the First quarter of 2000, Merrill completed seven domestic bond deals, two of which were for First-time debt issuers.

But encouraging developments are limited to the capital markets. The local banks in Thailand still face huge overhangs of domestic bad debts. Corporate loan demand is weak as debt-ridden companies seek to deleverage.

At the same time, regulators have tightened provisioning requirements - in Thailand, banks must be 100% provisioned by the end of the year. Banks are struggling to Find assets amid a recovery in corporate profits and continued flows into retail deposit accounts.

Thai Farmers is the local leader in retail, commercial and corporate banking. It is currently pushing into the under-banked corporate middle market and into fee-based services to improve revenues and offset slowing loan growth. It is a leader in risk management and, in the areas of trade services, foreign exchange and cash management its only real competitor is Citibank.

Citibank, the biggest foreign lender in Thailand, operates the biggest cash management business and is the largest custodian and primary dealer in foreign exchange. But it loses some ground to its nearest competitor, Standard Chartered, in trade services and to HSBC in personal banking.

Best bank: Citibank

Best securities firm: Merrill Lynch

Best at transaction services: Standard Chartered

Best at treasury services: HSBC

Best at trade finance: HSBC

Best local currency debt underwriter: Citibank

Best equity brokerage: CLSA

Best at cross-border capital raising: Citibank

Best M&A firm: Morgan Stanley Dean Witter

Citibank's and HSBC's battle for Asian supremacy continues - with Citibank taking from HSBC the best bank title it has held for three consecutive years. But this time around, Asia is a very different place and Citibank, too, is a very different animal.

This time last year, Citibank was still suffering from merger indigestion. Today, it is clear that Citibank has emerged a better, bigger and altogether more formidable Asian bank. With Salomon Smith Barney (SSB) successfully integrated, Citibank can rightly claim to be the most "regional" bank in Asia.

With the largest and most diverse customer base, Citibank is the leader in more markets and more product areas than any other bank.

Competitors in Asia argue that the integration is an illusion, that "it's bluff to pass the group off as a single financial institution".

Maybe. Citibank and SSB are certainly different brands but according to clients and many local competitors throughout the region the marriage works, regardless of whether the two entities sleep in separate beds. And HSBC is no longer a stronger force than the merged might of the two institutions.

In the past the key to the title in Asia has been strength in the region's most developed markets and minimal exposure to the duds. "Exposure" has been a dirty word for almost three years. In many ways HSBC's three-year victory run has been a victory for the cautious. Across Asia, credit has dried up as banks focus on the restructuring or refinancing of companies' existing debts. Even today, despite most of Asia's economies (Indonesia aside) having clawed back to reasonable health, banks in Asia aren't lending. HSBC shrank its loan book almost 7% last year. However there are potential borrowers in the region that have strong asset bases and are modestly geared. Citibank's loan group has made most of its money in Asia in 1998 and 1999 by buying assets in the secondary market and positioning for tightening credit spreads. Today Citibank is the biggest arranger of syndicated loans in Asia, the instrument that remains the major source of funding for Asian companies.

Another change has been the increasing focus on domestic currency markets. Reliance on short-term foreign-currency debt that landed Asia in the mire in the first place is being replaced by a desire for long-term local-currency debt. Such markets are now taking off, particularly in countries where interest rates are low and savings rates are high.

Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand are all developing solid local-currency debt markets, complementing the already established Hong Kong dollar market. And, as private capital starts to flow back into Asia, those firms that promoted local debt through the tough times are best placed to ride the upswing.

With the exception of Hong Kong, Citibank is a leader in most of Asia's biggest and fastest-growing local-currency debt markets, including Korea, Taiwan, Singapore, Thailand and India.

It has shown a commitment to the growth of these markets, even where margins are wafer-thin, using its unmatched Asian franchise, local and global distribution networks, and strong issuer relationships.

During 1999 and the First five months this year, there has been a steady improvement in investor sentiment towards Asian issuers.

Throughout Asia's desperate downturn and its surprising upturn, Merrill Lynch has remained the region's leading securities house - taking debt and equity activities together. In the bad times it prospered through the continuing volume of secondary business and now, as Asian markets heal, its large-scale regional presence is paying off. But, despite fervent competition from Merrill and other US-owned global banks, the Europeans are still a powerful force in Asian equity brokerage in both research and execution. Credit Lyonnais Securities Asia offers the best comprehensive, full-service equity brokerage business in Asia today.

With inter-Asian and intra-regional trade on the rise, and as the attitudes of international markets toward Asian credits thaw, the competition is hot among foreign banks to take Asian companies across borders to raise capital. Goldman Sachs is a powerhouse in cross-border equity transactions, HSBC is a leader in intra-Asia cross-border capital raising, leveraging off its China-Hong Kong connection, but Citibank leads in taking Asian credits across international borders. With the possible exception of Chase Manhattan, few can compete with Citibank's ability to take Asian credits in to the US and bring US issuers to Asia.

The competition is equally hot in Asia's mergers and acquisitions market, which achieved a record quarter during the three months to March 31 with transactions worth $76.5 billion, according to Thomson Financial Securities. The record was due mainly to huge telecommunications and media transactions across northeast Asia, notably in Hong Kong, Korea and Japan. Investment bankers say Asian mergers and acquisitions activity should achieve record levels this year because of restructuring of Japanese companies in the region's largest economy. The scramble for mandates continues apace among Goldman Sachs, Salomon Smith Barney, Merrill Lynch and Morgan Stanley Dean Witter, which advised either the buy side or sell side on more than 70 M&A transactions in the 12 months to end-May.

Morgan Stanley Dean Witter is a leading adviser in some of the region's biggest markets for M&A, including Hong Kong, Korea, Japan and China, where its key clients include China Telecom, Hyundai Electronics and Isikawajima-Harima Heavy Industries. Among its repeat business clients for M&A advice are Singapore Power, Hyundai, and DBS Bank.

For many banks, growth through product development and acquisition is today a higher priority than lending. It rings true in the business of trade finance, which has become a core focus for Asia's biggest banks. Trade Finance is central to Standard Chartered's promise to bounce back from the Asian crisis with stronger results in 2000. Standard Chartered has expanded with the acquisition of the trade Finance business of UBS and pending purchase of CIBC's structured trade Finance group. In product development, Standard Chartered is already offering business-to-business trade Finance services worldwide and is continuing to develop its speciality in commodity and structured trade Finance in emerging markets. It remains Asia's premier bankers' bank in trade Finance. But for the sheer size of its trade Finance business, HSBC wins. While Standard Chartered dominates the business for financial institutional clients, HSBC has the greatest share of multinational clients. In traditional trade offerings, HSBC's size is impressive, with a turnover of 21,600 LCs last year valued at $2.8 billion.

The slugging match between HSBC and Standard Chartered spills into the business areas of foreign exchange and derivatives, where Chase and Citibank also join the fray. Asian companies have become increasingly picky about the banks that manage risk and foreign exchange on their behalf. In derivatives HSBC has the biggest market share in interest rate products and dominates the market in deals worth between $250 million and $999 million.

In foreign exchange HSBC has the deepest market penetration and the biggest market share of total trading. It is the leading bank in almost every institutional category, including trading volume in the over $10 billion category, the $5 billion to $10 billion category and the under $1 billion market. It shares the top spot by trading volume in the $1 billion to $5 billion category with Citibank. But over the next 12 months, the pecking order is bound to change with Citibank and Standard Chartered only inches from knocking HSBC off its pedestal in treasury products and services.

Having been narrowly beaten by HSBC in trade Finance and treasury, transactional service is the business area where Standard Chartered has had its day. In custody, there is no disputing that HSBC has considerably more assets under safekeeping than Standard Chartered. But a bulky book is to be expected given the bank's client focus on Asia's biggest and most cash-flushed companies. Standard Chartered serves a broader Asian client base and is a bigger custodian in the corporate middle market. Its custody business is roughly 41% mid-market, 27% multinationals, 21% SMEs and 11% Financial institutions. Standard Chartered is also the leading custodian to Asia's emerging markets with a particularly strong presence in Thailand, Malaysia, the Philippines and, through its acquisition of ANZ Grindlays, India. Recently, one leading US-owned global bank outsourced all of its emerging markets clearing business to Standard Chartered. In cash management, Citibank has a small client base of top-tier companies while HSBC has a slightly broader but still top-tier clientele.

HSBC has been branded Hong Kong-centric in cash management, relying for a large chunk of its business on Hong Kong's high flyers.

Standard Chartered has a much bigger middle-market clientele and has become the leading cash management bank in emerging markets, witnessing particularly strong growth in China. In the 12 months to May 2000 the size of Standard Chartered's cash management business grew 30%.

Transactional service is the banking business area undergoing the most extraordinary change.

It's still not clear how the market will shake out. The internet is dramatically changing the cash management business as the whole payment process starts to move online. Business-to-business e-commerce is coming of age in Asia, where sales are expected to rise from $2 billion last year to $32.6 billion in 2003, according to International Data Corporation.

With Asia home to a large part of the world's manufacturing capacity, the move online by Asian suppliers will have profound implications for the way business is done worldwide. This time next year, as B2B e-commerce initiatives grip Asia's banks, a new generation of cash management products, including corporate services for collection and payments, will be available. Watch this space.