The 1960s and 1970s
Our coverage of Asia began with an article called: “The Un-Asian dollar.” “Bank of America’s brave attempt to establish a new market in ‘Asia-dollars’ in Singapore has got off to a somewhat sticky start.” The phrase ‘Asia-dollars’ didn’t stick, but the market – spare dollars in Asia for investment within the region – raised $323 billion in 2017. The article added: “Singapore rather fancies rivalling Hong Kong as the Switzerland of Asia.” That happened. And: “What happens if Lee Kwan Yew goes?” That took a while: he didn’t step down from public office until 2011, 42 years later.
“China trade: much ado about – what?” led an article following a thawing in relations between then-insular China and the Nixon-led US. “A vast China market is envisaged by some. Others are more conservative, and early enthusiasm may be subsiding.” China’s foreign trade for 1970 was $4.2 billion. In 2017 it was over $4 trillion.
Four years later, in 1975, Euromoney founder Patrick Sargeant joined a 19-day delegation to tour China and saw what was coming. “They will need another Great Wall of China to keep out the international bankers scrambling to lend them money.”
The fall of Saigon and the conclusion of the Vietnam War created a vibrant gold market in Guam, we reported, as thousands of refugees arrived there with gold sewn into their clothing. “A little plywood shack in Guam’s Tent City became one of the most active gold exchange houses in the Far East… customers ranged from wrinkled old farmers with more gold in their teeth than in their pockets to young Saigon teenagers.”
The Kingdom of Thailand borrowed $100 million from the Euromarkets, amid the threat of a coup, triggering analysis of a theme that would last for decades: emerging market political risk. In October 1977 India made the cover for the first time, after “shattering the spread barrier” and achieving a margin of 1% over Libor for a loan, “which has led to fears that the entire structure of spreads will collapse.”
Lee Kuan Yew spent an afternoon with Padraic Fallon in the Istana residence. He spoke of his vision for Asean moving forward “painfully, laboriously, fitfully, but together I hope.” Two years earlier we had featured Tony Tan, future President of Singapore but then at OCBC. “It is possible now to dial directly from Britain to Singapore,” he said with pride. Hong Kong-Singapore rivalry, still a theme today, first made the cover in October 1977. And our first Singapore survey, in September 1972, had an aerial picture of the Fullerton Hotel on the seafront. The sea is now two kilometres away from it.
“It’s probably the most influential private bank in the world.” Our two-month investigation into Bank of Tokyo included an interview with Yusuke Kashiwagi, “the supreme competitor”. A few months later we did the same to the Ministry of Finance. Euromoney was a leader in coverage of Japan throughout the 1970s and beyond, with our first cover story on the country coming in March 1971. Our opening question to the finance ministry asked why economic growth should be slowed from 13% per year to a mere 10%. By 2018 it was 1.1%, and that was a good year.
As early as 1980, we were writing about Japanese bank mergers that had yet to bed down. “Dai-Ichi Kangyo Bank is still under stress from a remarkable merger nine years ago.” In June, another headline that sounds highly familiar today: “Nomura’s international struggle.” By the 1990s Nomura would grace our cover frequently, though often for the wrong reasons following scandals: June 1997’s “Cleaning up Nomura” tells the tale.
Another eternal theme was first addressed: “Taking capitalism into communist China has been, so far, more tricky than profitable,” we wrote, in a featured titled “A spread of half a percent may sound better in Chinese.” But by April 1985, things had changed, as Euromoney held a landmark conference in the Great Hall of the People in Beijing. “A plethora of good-quality Chinese borrowers could soon come to the international markets,” we wrote – and they did. September 1986 brought an exclusive interview with People’s Bank of China governor Chen Muhua. “The purpose of our economic reform is to follow the socialist route with Chinese features,” she said. “But this whole thing is new.”
Pondering the handover (August 1981)
Euromoney began looking forward to a momentous day, then still very distant. “The Chinese puzzle of 1997: what happens when the lease expires on Hong Kong?” An HSBC executive said: “We’re only bothered by this business of 1997 because it bothers other people, mostly foreigners.” In May 1987, Taiwan looked like it would take advantage of the handover. “The Taiwanese could push Tapiei as a freebooting international finance centre to rival Singapore and even Hong Kong,” said our cover story. More than 30 years on, it does not feel that Taiwan seized that opportunity.
Tan Chin Tuan, the reclusive head of OCBC for 40 years, opened up to Euromoney. “Like a sensible motorist, I prefer to drive at a speed which I consider the optimum. It is unwise to accelerate merely because of fear of being overtaken.” Other landmark coverage of Singapore through the 80s included our cover “Dr Goh and the Singapore bloodbath” in June 1981, about “the lobotomy of the Monetary Authority of Singapore”; a July 1982 profile of DBS, called “Tomorrow the world…”; and a July 1980 interview with Wee Cho Yaw of UOB. The edition you are reading includes an interview with his son, now chief executive of the same bank.
The Philippines prime minister and finance minister Cesar Virata, a long-time fixture in Euromoney for a decade beforehand, was our cover story. “Without him, it’s possible that the regime of President Ferdinand Marcos would collapse.” Two years later, it did. The 1980s also featured an interview with Marcos’s conquerer, Corazon Aquino, in 1986. “There is a new mood.”
Deregulation swept Australia and future prime minister Paul Keating was our finance minister of the year for 1984. “He’s known as a head-kicker in Australian political patois: he doesn’t pull his punches.” By April 1989, in “Combative Keating Counters the Jabs and Jibes”, we found him under fire but fighting. “Europe is just ossified compared with this place.” In August 1986 we met Macquarie Bank for the first time after the unknown bank appeared as an advisor to BHP. “The reaction from many senior financiers was – what is Macquarie Bank?”
China's financial revolution continued as "banks which for years were the sleeping limbs of a totalitarian giant are waking up to a new life of exposure to international markets and competition among themselves", highlighted Euromoney. And western-style bankers were quick to seek relationships with these new players in the international financial markets.
Japan Takes Over the IMF (September 1988)
Euromoney predicted a new reality in which the IMF moves to Tokyo. It doesn’t happen, but our coverage of Japan was astute all decade. “This is the decade of the conquering yen,” said Euromoney in March 1982, correctly. We called the end, too, in April 1988. “The received wisdom is that Tokyo is abrim with confidence. But the real story may be in the less visible – but rather more significant – Tokyo real estate market.” The following year this proved to be true, leading to a lost decade in Japan which you might argue has never really ended
“I can’t recall as much deregulation in any Asian market in one go as we are now seeing in Indonesia,” said one banker. Shortly afterwards Johannes Sumarlin was our finance minister of the year as we suggested he might outlast Suharto. But Indonesian banking would later collapse in the Asian financial crisis. Another southeast Asian icon, Malaysia’s Daim Zainuddin, “the millionaire finance minister”, was interviewed in February 1985. “Now I have to be more cautious because it involves the nation,” he said. He is still a powerbroker of Malaysian politics today.
Our investigation uncovered a remarkable turn of events. “The collapse of the Japanese equity market in 1990 was orchestrated by the country’s Ministry of Finance and the Bank of Japan. The world’s two most powerful financial regulatory bodies acted in concert to fabricate a story that they’d fallen out with each other. They figured the Japanese markets would implode if deprived of their unquestioning belief in the coherence of Japanese monetary policy. They figured correctly.”
The guiding hand of China’s crisis (September 1990)
We made Li Peng the worst finance minister of the year in 1990, a year after the Tiananmen Square massacre. “Pinning down who is responsible for economic and financial policy within China’s ageing leadership is no easy business, but prime minister Li Peng is thought to have the biggest say.” This didn’t stop him from being China’s fourth premier, for 11 years. Another future premier, Zhu Rongji, then the reformist new governor of the PBOC, appeared in August 1993. Zhu had just sanctioned the death penalty for an ICBC branch head for accepting a bribe. “To kill one is to frighten 10,000,” Zhu said.
Euromoney investigated Citic, today one of the most powerful entities in China. “Owned by Beijing and run by a non-communist, it has well-placed friends in the party’s upper echelons,” we wrote. “Citic clearly sees itself and is seen by others as the advance guard for China’s modernization programme.” President Wei Mingyi tells us that compared to Bank of China, “we are only a small brother.” But 28 years on it represents a sprawl of powerful interests and owns CLSA.
Shanghai bids to become a top financial centre (April 1993)
For the first time, Shanghai was pitching big to be a rival centre the size of, or better than, Hong Kong. “If everything goes to plan, by 1995 the Shanghai Stock Exchange will have outgrown its nursery in the gallery of a former hotel ballroom. It will move to a new building in a development zone known as Pudong.” Pudong was still pretty much a swamp then. Today it is the beating heart of Chinese finance and the Shanghai Stock Exchange did indeed outgrow its nursery: in 2018 volumes topped RMB264 trillion in value.
“Japan is at a crossroads,” we wrote. “If it can bring about a radical overhaul of its economy by thorough deregulation it can again become the world’s most successful economy. If it just muddles through its present difficulties, it faces a future of economic growth lower than in the US and Europe.” It’s pretty clear which path was taken. Our journalists spoke to 260 senior Japanese executives to draw our conclusions.
Mar’ie’s lone war against corruption (August 1994)
By 1994 finance minister Mar’ie Mohammad was being described as the only clean government minister in Indonesia. “But Mar’ie will need more than just honesty to reform one of the world’s most corrupt banking sectors,” we wrote. “Every banking sector has its bad debts. But Indonesia’s is special. There is evidence that great swathes of loans have been made at the say-so of prominent people, without security, and with little expectation of repayment.” He would be gone by the financial crisis in 1998.
The only show left in town (February 1995)
As Latin America and Eastern Europe ran into trouble, Asia began to stand out. But there was an interesting dissenting voice: arch-bear Marc Faber, whose comments would seem most prophetic a couple of years later. “Asian countries will suffer from a lack of capital… we will see some big bankruptcies… we are at the beginning of a rout for emerging economies.” Further warning would come in our December 1995 survey of Asian banks, noting “alarmingly low capitalization.”
Nick Leeson brought down Barings from Singapore in 1995, but we weren’t convinced that was the whole story. “The lack of controls that allowed Nick Leeson to lose $1.4 billion was symptomatic of the lousy way Barings was run throughout Asia,” we wrote. “Behind the imposing façade, a skeleton crew of risk managers let their charges in Asia play dice. A rogue trader? More like blue-blooded bankers out of their depth.”
CICC was the first international investment bank to be licensed in China, with Morgan Stanley putting in $35 million for a 35% stake after three years of effort. “Will it blossom into a lasting and profitable marriage or will cultural clashes turn the partners against each other?” we asked. Morgan Stanley would eventually have to leave the venture, but having made a spectacular gain; Sino-foreign securities JVs continue to be a big and evolving part of our Asia coverage today. Our September 1997 cover story, How to Win the China Game, showed international strategy taking shape.
Our study of the international officer culture that drove HSBC, and how it would have to change in the 21st century, is still talked about today. Chairman William Purves, who joined the bank off a P&O liner in 1955, was the key interview, but among the many others was then-treasurer Stuart Gulliver, who would go on to run the bank. “There is very low bullshit, very little politics,” he said then. HSBC survived the handover and the Asian financial crisis, culture intact.
As the Asian financial crisis gathered pace, one of our most striking interviews was with Peregrine chief Philip Tose, arguing with might and main his house was intact despite rumours to the contrary. “Why should they know? What the hell’s it got to do with them?” Peregrine was liquidated a month later. In April 1998 we interviewed Andre Lee, blamed for the collapse, over six hours holed up in a Hong Kong apartment. “For a bank that makes its living in Asia and takes Asian risk, I find it difficult to believe that anyone could have survived.”
Asia is seen today as a leader in digital innovation, but in 2000 it was frontier-spirited in the extreme, with police called to restore order among 200,000 people who besieged HSBC’s offices to hand in applications for shares in a company called tom.com which, at the time, had no assets nor a clearly stated business model. “The new economy entrepreneurs are the old economy billionaires minus their suits,” we wrote.
Euromoney had reported several times on the growing threat of bad debts to China’s economy, and by 2002 the country had begun trying to sell troubled loans. “Those foreign investors prepared to pick their way through the rubbish on offer from China in the form of distressed loans may be able to uncover a few fantastic investment opportunities,” we said. “It’s certainly not for the faint-hearted.” As one banker said: “I have travelled all over China to see what they are trying to sell. And to be honest, I have seen some real garbage.” Resolution of bad debt in China continues to be a mainstay of our coverage today.
The President of the Philippines spoke to Euromoney about the state of the economy and her efforts to fight corruption. “I am not a lame duck,” she said. “Corruption is endemic and it cannot be changed overnight. If there are officials who are living way beyond their means and cannot explain their wealth, then that is pretty much evidence they have been getting income from somewhere that was not correct.” She was back for another interview in 2009.
Mahathir’s interview with Euromoney came on the brink of retirement. Nobody, most certainly including him, would have imagined he would be back in power, now in opposition, 15 years later. “I’m still making decisions knowing full well that they will be carried through,” he said of his successor, Adbullah Badawi. “I believe in leaving the new government to act freely not hampered by my presence.” It certainly didn’t work out that way.
As the global financial crisis kicked in, sovereign wealth funds in Asia and the Middle East assumed newfound power. “State-owned, cash rich and increasingly influential, sovereign wealth funds have emerged as the most controversial players in the financial markets,” we wrote. Just how powerful will they become?” Our cover story included a rare interview with Singapore’s Temasek; subsequent editions have lifted the lid on the sovereign funds of Korea, China, Australia, East Timor, and in this edition, Singapore’s GIC.
The CEOs of all three of Japan’s megabanks were interviewed in this study of the role they could play in a world where European and US banks were in sometimes terminal decline. “Japan’s megabanks find themselves in the glow of unaccustomed financial health,” we wrote. “But how do they put their new-found advantage to best use? And can they ignore the demons that caused such huge mistakes in the past?”
Nomura’s takeover of the European and Asian arms of Lehman Brothers made it the world’s largest independent investment bank. There was – rightly, as it turned out – doubt about whether Nomura could overcome the cultural clashes involved and become a true global heavyweight in investment banking. The deal was on the cover again, by now under considerable scrutiny, in October 2009.
Sri Mulyani Indrawati has given numerous interviews to Euromoney over the years, but this one, held at the G20 amid the global financial crisis and the Bakrie collapse domestically, found her in fighting form. “I’m the minister of finance in charge of handling this crisis, and that’s my commitment.” Much has changed since, but she’s back in the same job again now.
When we said we were writing a feature ranking the Asia strategy of international banks through the metric of Premier League football teams, there was a great deal of lobbying about who wanted to be who. In the end Goldman Sachs came out as Man Utd, the leader of the time; Standard Chartered came out unhappily as Birmingham City. There was a serious point to it all: the key to success in banking in Asia.
We have always covered the big deals out of China – ICBC, China Telecom – and our story of the ABC IPO is an example of our inside-the-room detailed coverage. The 11 banks who had to sell China’s weakest big bank in dire market conditions and in record time faced a memorable challenge. “I recall one investor looking at Chairman Xiang and saying: Look, I trust you, but this bank has half a million staff. How do you know one of them is not going to cause a scandal?”
A fee of one one millionth of a percent to be a bookrunner in the Coal India IPO marked a new low for fees in India. Six big-name bookrunners got $34 between them on the largest IPO on Indian history. “It has never been our intention to get banks to bid zero fees,” a government minister told us. “That’s their choice.”
A forensic examination of fees in Asia showed an unhealthy tilt to the equity capital markets, the total dominance in China, growing competition from local houses, and a trend to dilute fees between as many as nine bookrunners. Who’d be an international investment bank in Asia? “It is an article of faith in investment banking that Asia is the future. It is where the growth economies are, the dynamic young populations, and the most vibrant trends in trade and market development. But global bank HQs need to temper their expectations.”
Singapore’s finance minister Tharman Shanmugaratnam gave a rare interview to explain a reform agenda for his country and to warn about China’s growth model and destabilizing capital flows. “The government has done so well because it has not stopped running.” We got an insight into a private man. “Sometimes work can be quite relaxing,” said one of the busiest men in southeast Asia.
Nobody else in financial print journalism got an interview with Jho Low, the man at the centre of the 1MDB scandal, after accusations against him first arose. We did, in Hong Kong, and he was angry. “I’m just constantly being gunned down,” he said. Our coverage of 1MDB, and in particular its impact on banking, has been comprehensive: our May 2018 story on Mahathir’s re-election and the renewed scrutiny of 1MDB scandalized Malaysia.
The Widjaja family, once pariahs of the international financial markets and still the record-holder for the biggest ever default by an emerging market corporate through their Asia Pulp & Paper arm, were back – and Euromoney investigated how and why. Chinese banks were at the heart of this apparent forgiveness of a smeared name. “Banks always make the same mistakes,” one banker told us.
Our decision in 2016 to name DBS best bank in Asia, and best digital bank in the world, was a landmark: for the first time a homegrown Asian name was considered pre-eminent above dominant international rivals. We have covered the DBS story, and in particular its leadership in digital innovation under chief executive Piyush Gupta, at length, from its unique metrics for measuring the returns from digital clients, to a trip to the Sumatran jungle to meet its eccentric chief innovation officer Neal Cross.
Our interview with Arundhati Bhattacharya found a supremely energetic women attempting to complete a seven-sided merger in India’s largest institution, one that has to combine profitability with a vast social burden. “When the western nations’ banks adopt digital, they don’t have to sit back and think: what about those customers who can’t read and write?” she said. “I have customers who have to be led by the hand to give their left thumb impression.” The same edition studied the revolutionary Aadhaar digital system in India – a billion-strong biometric database with big implications for banking.
Euromoney has led the way on coverage of non-banks entering financial services in China on the back of smartphones, big data and a financial inclusion mandate. Our interviews in Ant Financial’s Hangzhou headquarters followed a year of lobbying to get in. “Our vision is that we are trying to serve 2 billion customers within the next 10 years,” Ant told us. That’s 30% of the human race. Subsequent features have examined Ant’s peers around the region including PayTM in India and Go-Pay in Indonesia.
In our IMF cover story we sought to cover the climate finance challenge from every possible perspective: banks, multilaterals, governments, investors, and most importantly, the poor. Our coverage took us from the halls of the Asian Development Bank to tribal meetings in remote villages in Kiribati, officially the most vulnerable nation to climate change anywhere in the world. “The lack of capacity in the poorest and more vulnerable parts of the world to understand the mechanics of international climate finance, much less access it, is a serious problem.”
China’s Belt and Road Initiative is all that anyone talks about in Asia these days, but what does it really mean? We spoke to 16 institutions all looking at Belt and Road from a different perspective, from Chinese policy funds to international banks, institutional investors to project borrowers, multilaterals to recipient country ministers, private banks to NGOs. Since then we have covered Belt and Road in depth from Sri Lanka to Djibouti and beyond.
Noboyuki Hirano is the world’s most recognized and respected Japanese banker and an articulate voice on the demographic challenges facing Japanese banking and society. He wants MUFG to be the world’s most trusted financial institution. It is helped by its stake in Morgan Stanley; saving that bank during the global financial crisis turned out to have a wide range of pay-offs that nobody expected. “Everyone is aware we face an unprecedented challenge.”