Citi's Asia global banking head predicts bumper year

Citi's Asia global banking head Farhan Faruqui expects a busy year for capital markets issuance in Asia-Pacific and some major outbound M&A news.
 Farhan Faruqui
Farhan Faruqui

What will be the key themes for investment banking in Asia in 2010?
You are already seeing the themes in some of the transactions that are currently in the market -- active capital markets issuance on the back of strong liquidity, especially in the financial institutions space.

On the M&A side, last year was light for the market in general. Some of the blockbusters that were announced never materialised, but the strategic discussions have continued into 2010. We sense from the conversations we are having with clients now that this will be the year of renewed outbound M&A from Asia. There is increased confidence -- liquidity is there to support transactions that need financing. Asia's growing breed of global champions that blazed a trail a few years back showed those with similar aspirations what was possible. Expect to see more headline outbound M&A transactions from China and India.

Inbound M&A will be equally interesting. You have already seen the Prudential/UOB link-up [Citi advised Prudential] and this trend of global/international companies taking stakes or forming joint ventures with Asian companies will continue. The growth prospects in this region and rising consumer affluence are a big draw for multinationals with lower growth prospects in some of their local markets.

In capital markets it really feels as if there was no holiday season. It was one of the busiest Decembers on record in Asia and it is already a busy start to the year. Issuers are on the road with their equity raisings -- [Citi is currently roadshowing IPOs for Tiger Airways and SouthGobi] -- and we led the first deal of 2010 which was a $600 million equity trade for Reliance Industries earlier this month.

In line with our projections for key themes, financials have announced major fund raisings, such as the SMFG [Sumitomo Mitsui Financial Group] $9 billion offering. Financial issuance will continue throughout the year across the debt and equity markets, notably out of China. Other countries that will be busy are Australia and India with several transactions from both currently in the market.

With increased competition out there, how do you cope with some of the new entrants looking to gain share by cutting fees?
There are certainly elements of fee compression. But it is execution and distribution that count and that is how we differentiate ourselves and build relationships with our clients. Many issuers realise that there is no point in paying a low fee if all you end up with is a deal that disappoints -- investors have long memories.

What are your priorities for Citi IB in Asia this year?
We have excellent momentum and the priority is to ensure this continues. We are seeing many clients turning to Citi to help them with their needs. FinanceAsia put it best in the write up for the end of year awards -- we really are becoming "the go to bank" for many clients in the region.

We have a franchise that spans the region and a product set that means we can have a conversation with a client across the full capital markets and banking platform. Our global platform in more than 100 countries also means we have an unparalleled distribution network and if a client is looking for M&A ideas, we can literally look all over the world for them with our relationships.

A key priority is to ensure that we continue to work as a team and leverage our relationships. We must ensure that we are always showing innovative ideas to our clients. It is proactive advice and ideas that win business and repeat business and build a relationship that makes us the first call.

What impact has the global banking structure change you made last year had on Citi IB in Asia?
The impact is being felt by our clients. It has made us more unified as a team to support our clients. As we feel the impact today, we wish we had done it earlier.

We now have an established lead banker who is supported by a team of product specialists across the franchise. The lead banker sometimes is a corporate banker, sometimes an investment banker, it all depends on the client and the relationship. The global banking structure gives us a single, unified coverage force that can deliver to our clients the best thinking, products and services in the industry.

In what areas will you be hiring in the coming year?
My number one priority is talent. We have an outstanding team which has come through one of the most difficult times for this industry. My focus is on developing this existing deep bench of talent. But we will always look to complement the team and hire new talent that will deliver outstanding ideas and solutions to our clients. We have shown that last year with the hires of Rodney Tsang (co-head of China investment banking) and Jason Johnson (head of natural resources for Asia) as two examples. This year will be no different. We will also see a continued shift of people from Citi globally coming to Asia to join the team here.

We also place just as great an emphasis on the talent of the future. We spend a lot of time identifying the best talent at leading universities and business schools across the world and 2010 will be no different. Several of these colleagues from previous years are now established leaders for us in Asia.

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