The following banks will be honoured at an awards dinner at the Four Seasons hotel in Hong Kong on February 2. If you would like to book a table at the event, please contact Amber Gordon at amber.gordon@financeasia.com.
For the rest of our awards, please visit these pages:
House awards, day 2 Best deals Best country deals
BEST BANK, BEST COMMERCIAL BANK Citi
Citi has had one of its most successful years on record in Asia. Highlights included the bank leading 15 initial public offerings in China, the busiest 12-month period in its history, boasting total deposits and assets under management that top all-time highs of $240 billion and $190 billion respectively, adding close to 100 of its new smart banking branches and opening 20 China desks across the world.
These investments are behind the bank’s 10% increase in revenues to $11.7 billion for the first nine months of 2011, which have generated around 35% of global profit. Global transaction services (GTS) was a standout performer and is now the largest business globally for Citi by profit.
The consumer bank had another strong year that included positive operating leverage in the most recent quarter. The corporate bank reported that revenues were up some 20% and the bank’s global subsidiaries business — which banks close to 90% of the Fortune 500 — also reported strong growth.
Citi’s sheer reach — it has a platform across 18 markets — helped it stand out this year. Or as CEO Stephen Bird put it: “We have a model for all seasons.” With revenues of $1 billion in eight markets and a split of 32% retail, 21% cards, 29% securities and banking, and 18% GTS, Citi has a balanced business that continues to out-gun regional rivals that make the bulk of their Asian profits from Hong Kong and in some cases are exiting parts of Asia.
BEST INVESTMENT BANK Goldman Sachs
The best investment bank award typically goes to a bank that stands out as either the best equities house or the best M&A house and has strong positions in FIG, GIG, TMT and real estate. This year is no different. Goldman Sachs won the Best Equities House award on the strength of its leadership in bringing the year’s landmark deals to market, including the IPOs of Prada, Chow Tai Fook Jewellery and HKT Trust. The US firm was also very much in the running to win the Best M&A House, and worked on award-winning deals such as the BP-Reliance strategic partnership, Hyundai Motor Group’s $4.4 billion acquisition of Hyundai E&C and Home Inns & Hotels’ $470 million acquisition of Motel 168.
In past years Goldman hasn’t always been present on the debt front, but this year it was involved in a number of high-profile deals. We gave it the nod for its work on CNOOC’s $2 billion dual- tranche investment grade bond, and also liked the high-yield bonds it brought for Country Garden and Hyva Global.
As for some of the criticisms lobbed against Goldman Sachs this year, we hear the firm’s response. Rivals argued that Goldman was not present in the equities market during the height of the market volatility in September and October. Goldman defended that decision this way: “Part of our job is to advise clients which market to jump into.” And advising clients to avoid one of the worst markets in recent years was not a bad one, at least for those clients who could afford to wait.
There were other accusations too (Goldman elicits heartfelt attacks at times). Some said that it joined transactions late, that it didn’t make the most money in 2011 and so on. We weighed those criticisms, and in some cases we took them on board. But overall we still felt that it was Goldman’s year. Despite all the mud that rival banks throw, they all tend to agree that Goldman was their biggest competitor this year — and there was no such consensus about any other bank during 2011.
BEST PRIVATE BANK UBS
At first glance it might seem that a $2.3 billion trading loss would stack the odds against UBS coming away with our top private bank award this year. But the fact that the Swiss bank has committed to making its private bank stronger and confirmed on November 17 that it is closing various investment banking businesses that put its balance sheet at risk, is testament to how critical the private banking business is to UBS — and the lengths to which it will go to preserve it.
To select the best private bank we pose a hypothetical client scenario to the contenders. Each year, the scenario builds in, albeit obliquely, the issues that have dominated headlines during the year. This year the client was setting up a charitable foundation. Wealth storage and return on capital were both of equal importance. We overlay the proposed portfolio with a qualitative assessment of the factors we feel would be valued by the client. We felt that a charity would be keen to be associated with a best-in-class private bank, which has demonstrated over time its experience and capabilities.
As usual all contenders had some standout points. As would be expected all banks were long fixed income, given the volatility in the environment and the requirement for the foundation to have a stream of steady, annual cash flows for its outlay each year. Credit Suisse made an aggressive suggestion that part of the portfolio be levered, but backed this up by providing a revolver themselves. On a standalone basis, Citi’s proposed portfolio was compelling. HSBC brought in an impressive philanthropy expert who asked all the right questions.
But in the balance UBS stood out. The team presented a balanced portfolio after giving adequate weight to all parameters. The pedigree it brought to the table, including the work it has done for some of the leading charities in the region, could not be faulted. And finally, neither could its response to the trading loss. UBS clearly stands out as the best private bank in the region — and the lead it has on its competitors in assets under management corroborates this.
BEST M&A HOUSE Morgan Stanley
This should have been an easy decision, judging purely by Dealogic’s completed M&A league tables. Goldman Sachs is credited with advising on $64 billion of deals so far this year, while its nearest competitors, Bank of America Merrill Lynch and Morgan Stanley, have both advised on less than $50 billion.
However, when we drilled down into the deals that made up these rankings and looked at the roles the individual banks played, the field looked much closer than the league tables suggest. In our view, Dealogic’s rankings flatter Goldman. Burrowing through the deals, we concluded that Morgan Stanley had edged it, and we also noted Citi’s impressive rise, which we expect to continue into next year.
Morgan Stanley runs a traditional heavyweight US M&A business that consistently picks up mandates on some of the region’s biggest deals. In 2011, it advised BP on its $9 billion investment into Reliance in India, which was probably the most complicated deal of the year, at least in terms of the number of moving parts. It also had a good balance of deals across the region, including deals for Huawei in China, the sale of the Titleist and Footjoy brands to Fila Korea and the sale of AIG’s stake in Nan Shan in Taiwan.
But one of its most impressive deals this year was Nestle’s $1.7 billion acquisition of a 60% stake in Hsu Fu Chi, which won approval in China last week and is a landmark investment into the country.
Indeed, Morgan Stanley was present across a range of the biggest themes in Asian M&A in 2011, including consolidation among financial institutions, energy and natural resources deals, inbound investments into the consumer and retail sectors, and outbound acquisitions of foreign brands and knowhow. The league tables might not quite show it, but it was Morgan Stanley’s year in M&A.
BEST EQUITY HOUSE, BEST IPO HOUSE Goldman Sachs
When we gave the Best Equity House award to Goldman Sachs last year we noted that for the first time in years it had the volume, depth and geographical breadth to be viewed as the overall best house, not just a bank that acts on behalf of select high-quality clients. This is still the case, although as the market has deteriorated and the pickup in volatility has made equity issuance an increasingly risky business, Goldman has become somewhat more conservative and also a bit more selective about what business to get involved in. This has been particularly noticeable with regard to block trades, where Morgan Stanley has pulled ahead this year. Goldman was also largely absent from the market in September and October, which it defends by arguing that it was recommending clients to wait for a better market window. And in light of the poor market performance during the past four months, we do find it difficult to fault that strategy, particularly since Goldman has been very active in November and December with leading roles on the IPOs of HKT Trust, Chow Tai Fook Jewellery and New China Life Insurance, which raised between $1 billion and $2 billion each. Or as one rival banker put it during the November pitch process: “Yes, Goldman did better in the first half, but so did the market.”
What made us side once again with Goldman is the fact that it has been on an impressive number of the most high-profile listings this year and has played a leading role on almost all of them. Aside from the three already mentioned, it also worked on the IPOs for both Prada and Samsonite, which were the two key international companies to list in Hong Kong this year; it was a bookrunner on Sun Art Retail Group, which we view as the best IPO in Asia this year, and it worked on the well-executed listing of Mapletree Commercial Trust in Singapore. Together with DBS and Deutsche Bank, it also led the listing of some of Hutchison’s ports assets through a business trust in Singapore, which at $5.45 billion was the largest IPO in Southeast Asia ever. That stock has traded badly, but aside from that we feel that Goldman’s IPO execution in general is very solid and compensates well for the fact that other banks may have been on more IPOs in terms of numbers. One example is Deutsche Bank, which has worked on an impressive 16 IPOs this year, thanks to its strong origination capabilities both in China and in Southeast Asia.
We also feel that Goldman’s year has been more balanced between IPOs, CBs and block trades/follow-ons compared to Morgan Stanley, whose franchise has been very focused on blocks this year. Morgan Stanley argues that this has helped lift its profitability in a year when IPO fees have dropped off, but one persistent comment in the past few months has been that many of its blocks have been priced too much in favour of the seller. While some of that may be gripe from rivals who are finding it difficult to keep up, we do note that even on the best of these deals investors haven’t made much money.
And Goldman has by no means pulled away from the blocks business. In fact, the $1.8 billion sell-down in China Pacific Insurance that it arranged for Carlyle in January this year was one of the most elegantly executed trades all year. It also gave Goldman the top position in Dealogic’s ECM league table that it has then hung on to all year. Other noticeable trades include a $593 million combined follow-on and sell-down in Youku.com in May and a second $989 million sale by Carlyle in CPIC in July.
BEST EQUITY-LINKED HOUSE J.P. Morgan
Listening to the market chatter, it sounds like 2011 will be remembered mostly for the poor performance of several new CBs and for the fact that the new issue market was shut for long periods at a time. Sure, there were well-structured deals too and some attempts to push the envelope, but in the eyes of many market participants, the past year has brought little real innovation and not much excitement.
To select a top house in this kind of environment is not all that easy. Arguably, our two runner-ups have had a good year and deserve a mention: Credit Suisse has churned out more deals than anyone else and played a lead role on most of them, while Goldman Sachs has brought big issues and tops the league table in terms of deal value. However, the majority of Credit Suisse’s transactions have been quite small and some of Goldman’s bespoke solutions worked mainly for the issuer. Both banks were also on San Miguel’s concurrent follow-on/CB transaction, where the CB looked more like a rescue tool than a franchise-defining print.
So, our choice falls, once again, on J.P. Morgan. The bank has brought a series of well-executed deals that traded up after pricing, and while it wasn’t on the biggest deals it delivered trades that worked for both issuers and investors.
One of the criticisms thrown at it by rivals is that some of J.P. Morgan’s bonds traded up a bit too much, suggesting that the pricing was too generous towards investors, but at times of high volatility and lots of headline risk, it is hard to fault something that also provides certainty of execution for the issuer.
Among its key deals was a $400 million CB for TPK Holding, the main supplier to Apple’s iPhones and iPads, that it led together with Nomura. It also introduced a new class of issuer to the equity-linked market as it helped two separate unlisted Chinese SOEs (GDH Limited and Tsinlien) to sell bonds exchangeable into Hong Kong-listed entities. Both deals were viewed as nice trades at the time.
Importantly, J.P. Morgan was the sole bookrunner on five of its seven deals, which not only shows that issuers are comfortable with its ability to execute, but also supports the bottom line. On that topic, we are also hearing that J.P. Morgan has done a very good job with its trading book this year and has made money even as CB prices has come under pressure.
BEST MID-CAP HOUSE Credit Suisse
Deciding this award is always tough because most banks that have a dedicated focus on the mid-cap space tend to operate in one or two markets only, while the international houses treat mid-cap as an integrated part of their overall ECM franchise. The latter is particularly obvious this year as four banks are almost tied at the top of the Asia ex-Japan mid-cap IPO league table, having done five or six deals each. And differentiating between them was made even tougher by the fact that smaller stocks have been hit particularly hard by the volatility in global stock markets and the drop in risk appetite during the second half. As a result, many of this year’s mid-cap newcomers are currently trading well below issue price.
In the end, our choice is Credit Suisse. The bank has brought to market a nice selection of mid-cap companies from China, Malaysia, Indonesia and India and the deals have been generally well-structured and well-priced for the environment. One of its IPOs, for iron ore miner China Hanking Holdings, was even largely covered at launch to ensure it would get done. Thanks to this approach, Hanking was able to successfully raise $148 million in September even as numerous other deals were getting pulled, and as of mid-December it was still trading around issue price. Other well-received IPOs brought by Credit Suisse this year include Chinese tea retailer Tenfu, Malaysian shopping-mall operator Pavilion Reit and Indonesian mobile phone retailer Erajaya.
But we are also impressed by how Credit Suisse has used its strength in convertible bonds to help mid-cap companies raise capital. Notable examples are US-listed Renesola and Jinko Solar, which were able to raise $200 million and $125 million respectively even though share prices in the sector have fallen significantly this year. For these companies, selling new shares would have been virtually impossible. It has also helped arrange CBs for Hong Kong-listed China Huiyuan Juice and for Osim, a Singapore-listed retailer of massage chairs and other lifestyle products.
BEST INTERNATIONAL BOND HOUSE/BEST SOVEREIGN BOND HOUSE/BEST LOCAL CURRENCY BOND HOUSE /BEST OFFSHORE RENMINBI BOND HOUSE HSBC
HSBC took a near clean sweep of the awards this year thanks to its unprecedented dominance in both the G3 and local currency markets. This year, it pulled out all the stops and drew sharply ahead with a market share of 12.5% for Asia ex-Japan G3 bonds. This was a sweeping margin over its nearest rivals, Citi and Deutsche Bank, which had market shares of 8.7% and 7.5% respectively, according to Dealogic.
Previous criticisms levelled against HSBC have been that it focuses too much on bland vanilla transactions. More boring and less sexy, its rivals have scoffed in the past.
However, this year, the bank’s debt business reflected both breadth and diversity. It picked up its game in sub-investment bonds and continued to power ahead in the investment-grade space, where it is traditionally strongest.
Noteworthy transactions included marquee debut bonds for Pertamina and real estate developer Longfor (on the high-yield side). The bank also proved its structuring capabilities with a handful of corporate hybrids, the most noteworthy one being Citic Pacific’s --on which it acted as joint bookrunner with UBS -- which helped re-open Asia’s hybrid market. Another market re-opening trade that HSBC was involved in was Korea National Oil Corp’s bond in October. Amid volatile conditions in 2011, a number of sloppily executed transactions were brought to market and on this front, HSBC avoided many of the missteps made by its rivals.
HSBC’s dominance in the G3 markets was also reflected in the sovereign bond league tables. The bank’s Islamic financing skills helped it pull ahead of traditionally strong sovereign houses such as J.P. Morgan. It acted as a bookrunner on five of the seven Asian G3 sovereign deals, putting it slightly ahead of Citi, which had completed four deals.
As Asian countries have brought more interesting deals to their local currency bond markets, it has further allowed HSBC to shine in the sovereign space. Notably, it was the only foreign bank on Thailand’s Bt40 billion ($1.3 billion) inflation-linked bond and it was also a global coordinator on China’s Ministry of Finance multi-tranche dim sum bond.
In the offshore renminbi space, HSBC was ahead of its closest rival by quite a stretch. It had a market share of 20.2%, roughly double that of Standard Chartered, which had a 10.4% market share according to Dealogic. Its dominance in that space is clearly testament to the strength of its relationships and franchise in Hong Kong.
Although the bank attracted criticism from rivals who said its dim sum volumes were generated by its ability to “book” some of these deals, this was robustly rebuffed by HSBC during the pitch process.
Notwithstanding this, the fact remains that HSBC’s dim sum franchise has a diversity and breadth that is unrivalled by its peers. Its dim sum coverage includes a mix of Chinese state-owned enterprises and an impressive number of multinational companies.
It played lead roles on high-profile dim sum deals such as ICBC Asia’s sub-debt and the largest corporate dim sum for Baosteel and CNPC. HSBC’s deal roster for multinational companies was equally impressive and included names such as BSH Bosch and Siemens Hausgerate, Tesco, Air Liquide and BP, which all contributed to the market’s diversity.
Finally, in the local currency bond space, it was a two-horse race between HSBC and Standard Chartered. However, this year, HSBC succeeded in improving its market share, raising an impressive $12.4 billion for 148 borrowers giving it a market share of 2.8% versus Standard Chartered, which raised $9.3 billion for 191 giving it a 2.1% market share.
The bank also delivered more cross-border Asian local currency transactions, chalking up $6.1 billion in local currency bonds versus Standard Chartered’s $1.5 billion, according to Dealogic. This suggested that the bank was offering clients solutions to achieve the best cost of funding in different currencies. Overall, we also feel that HSBC brought forward more impressive deals. This included Thailand’s inflation-linked bond, a high-profile mandate that it managed to wrest from the grips of Standard Chartered and Deutsche Bank.
BEST HIGH-YIELD BOND HOUSE Deutsche Bank
Deutsche Bank wins the best high-yield bond house award for the second consecutive year. The bank ended 2011 second in the league tables with a market share of 11%, having raised $1.75 billion for 11 issuers, putting it slightly behind Citi, which raised $2.1 billion for 12 issuers, according to Dealogic data.
Despite the slight edge Citi had in terms of volume, Deutsche Bank differentiated itself in a number of ways. Earlier than anyone else, it identified high-yield investors’ desire to diversify away from the China real estate sector and it also brought the most number of debut borrowers to market.
This included a $500 million high-yield bond for Winsway Coking Coal and bonds for Texhong Textile and West China Cement. It played either a sole or lead role in many of these deals, highlighting the bank’s distribution capabilities. The bank was also involved in debut dollar deals for MIE Holdings, China Shanshui Cement, Tata Power and Fufeng Group.
Although it missed out on Vedanta Resources’ jumbo deal, Deutsche was on a number of other big deals, including Country Garden’s $900 million bond and Evergrande’s Rmb9.25 billion ($1.4 billion) synthetic high-yield bond. It worked on a good balance of small and large transactions.
Aside from debut borrowers, clients also returned for repeat business, one example being Stats ChipPac, which mandated Deutsche for a $200 million high-yield bond on a sole basis.
While we are not discounting the work done for quasi-sovereign sub-investment grade names, we feel that Deutsche Bank as a house worked on more deals for “true” high-yield borrowers. And if its clients keep returning for repeat business, it is a clear sign that the bank is doing something right.
The bank’s structuring abilities and market intelligence were also showcased on the liability management front, where Deutsche Bank acted as a sole dealer manager on True Move’s $690 million debt tender. True was another repeat client and Deutsche knew where most of the bonds were held, giving it an advantage over its rivals. While Deutsche is seeing greater competition from the likes of Citi, Standard Chartered and UBS, we think it had an impressive year that justifies it holding on to the award.
BORROWER OF THE YEAR TBA
We will announce the Borrower of the Year at our awards dinner at the Four Seasons hotel in Hong Kong on February 2.
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