China Investment Bank’s Rise and Rise Reflects Seismic Shift in Global Finance
The success of BOC International over the past decade is part of an evolving narrative in global banking that is reshaping the world of finance.
It is a story of growth, progress and transformation that mirrors China’s extraordinary economic expansion over the past decade and the country’s rising prominence in global capital markets.
When BOC International (BOCI), Bank of China’s investment banking group, built its Debt Capital Markets department a little over 10 years ago, the team began life in a small office surrounded by the dominant equity brokerage, research and IPO teams.
Established in 1979 and China’s first Chinese investment bank, BOCI started with a strong equity and brokerage platform then took the initiative to build businesses and become a significant player in the Chinese investment banking space with comprehensive product offerings.
The idea of Chinese companies going to offshore markets for debt financing was an exotic and ambitious one, with Asian league tables dominated by international houses. And within months, the timing seemed even less auspicious, as market conditions deteriorated and the financial tsunami closed in.
Fast forward a decade and the turnaround could hardly be more remarkable. BOCI is now one of the best investment banks in Asia and a major player in the fixed income space. The bank’s fixed income team has more than 70 professionals and has earned an enviable reputation as one of the most experienced and stable teams in Asia.
In 2016 and 2017, and the 2018 fiscal year to date, Bank of China (BOC) ranked number one for offshore China bonds, with a 7.6% market share in 2018. Also in 2018, BOC ranked third for all Asia ex-Japan G3 (USD, EUR and JPY) currency issuances after ranking fourth in the previous two years, with an impressive 5.3% market share in 2017. BOC is also the only Chinese bank to be ranked in the top 10 for all Asia ex-Japan G3 currency bonds.
Meanwhile, BOCI’s Debt Capital Markets team completed 129 transactions in 2018, in addition to more than 500 deals between 2013 and 2017, in a broad range of currencies and covering structures including bonds, hybrids, convertible bonds, preference shares and ABS.
Working up from a low base has proved a critical advantage for BOCI. Its success is grounded in part in its ability to stand alongside its clients through the entire process of coming to the capital markets for the first time – from structuring, advising on ratings and coordination of documentation through to marketing and distribution, research and secondary support for financing.
Building the right team to offer that suite of services was a long and costly process but it has reaped rich dividends. Today, both issuer and investor clients respect the BOCI team and give it repeat business, confident in its ability to do a first-rate job for them.
The esteem in which the team is held is also shown by BOCI’s ability to lead landmark transactions by itself, as it did in in the landmark $6.5 billion Bank of China AT1 transaction in 2014 for which BOCI was sole global coordinator.
Elsewhere, BOCI has executed 15 debt capital market transactions for Yuzhou Properties since its IPO in 2009, which was also handled by BOCI. It has subsequently handled 20 bond offerings for the real estate giant Greenland Group since 2014.
As well as offering outstanding service to existing clients, BOCI has expanded its network across a range of industries and government bodies and explored new overseas markets including Indonesia, Singapore and Korea, where BOCI is the only Chinese bank to have acted as bookrunner on international bond offerings (Korean Air and KDB Life).
The stellar track record of its Debt Capital Markets team aside, a key strength for BOCI is that it is the only Chinese investment bank with an extensive sales network and offices covering more than 1,000 institutional accounts in Asia, Europe and the Middle East – making it a bridge for investors worldwide.
Its investment coverage network includes a huge number of Chinese investors in Greater China and some of the world’s largest investors. Greater China investors have become very active in the market, often stepping forward as cornerstone investors in new issuance transactions.
BOC is the first bank to have issued bonds of the visionary, continent-spanning Belt and Road Initiative. It remains an active issuer of these bonds, issuing multi-currency bond offerings at least once a year through BOC branches around the world.
The ascendency of BOCI and its growing prominence in markets worldwide underscore an evolving narrative in global banking. While US investment banks may appear to have always dominated global trading, their influence stretches back only 40 years – and the changes the BOCI DCM team have overseen in the past decade is part of a power shift shaping a new paradigm in world finance.
Chinese banks now have realistic ambitions to match the influence of their US counterparts, although they realize they still have some distance to go to create global platforms that incentivize bankers from different organizations and different parts of the world to work together.
“We are determinedly working towards greater coordination within the BOC Group to better leverage on our overall strengths, allowing us to further expand our client reach and overall product range in future, and become a more international Chinese investment bank to support the BOC Group, as well as the growth of China,” explains Tong Li, chief executive officer of BOCI.
• BOCI has been named 2018 Best Corporate and Investment Bank by Asiamoney.