BEST COMMERCIAL BANK
Established in 2001, Brac Bank pioneered in Bangladesh lending to small and medium-sized enterprises, which represent the bulk of economic activity but go ignored by the bigger lenders. Brac Bank’s model has been simple: mobilise funds from the cities to lend to rural or smaller businesses.
As a result it enjoys a better credit profile and has grown to become a bigger enterprise that also leads the way in serving non-resident Bangladeshis abroad, as well as corporate and institutional clients.
Its non-resident niche makes it a leader in foreign exchange, and the third-biggest player in remittances. And as a result of its nationwide SME focus, Brac Bank has a much bigger consumer footprint than bigger rivals. These attributes allowed Brac Bank to rapidly grow its deposit base in the past 12 months even as economic growth has slowed; SME loans have also grown in number and size; and the business has contributed to a more inclusive growth model for Bangladesh.
BEST FOREIGN COMMERCIAL BANK
STANDARD CHARTERED BANK
Standard Chartered prides itself on its long history in Bangladesh. Its presence in the country makes it the biggest taxpayer among banks, and third highest in the country across the board. This is not the sort of thing that banks would normally boast about, but in a market where longevity and commitment counts, it tells a story.
More vitally, StanChart accounts for about 50% of all deposits held with foreign banks in the country, and 62% of all foreign bank loans and advances. These positions give it an unusually strong balance sheet. Its revenue for 2012 reached about $140 million, representing a 23% year-on-year rate of growth, highest of all banks, local and foreign, in Bangladesh.
In addition to its retail and consumer businesses, Standard Chartered is the core transaction bank for the biggest multinationals, development institutions and local financial entities. It remains the leader in foreign exchange and derivative solutions. For example, it concluded the country’s biggest ($1.5 billion) underwritten and unsecured local-currency syndicated term finance, for cell phone carrier Grameenphone.
Another milestone was to provide interest-rate hedges to Bangladesh Petroleum Corporation on the back of an internationally syndicated loan facility of $200 million, representing the first interest-rate swap conducted with a state-linked entity.
This isn’t an award to simply recognise the biggest player, and Industrial and Commercial Bank of China doesn’t win it because of its scale — even if that is impressive in its own right. Rather, it comes up trumps because it has managed to generate solid growth and returns despite its large asset base, and because it continues to raise the bar for China’s state-owned banks in terms of reforms and innovation while at the same time helping to support the domestic economy.
Among other things, it has helped small and medium-sized enterprises, particularly those focused on advanced manufacturing, services, energy-efficiency and strategic emerging industries, to diversify their financing channels and reduce their funding costs through tools such as financial leasing, bond issuance and syndicated loans. According to Dealogic, ICBC ranked fourth in terms of underwriting onshore bonds for Chinese companies and banks in the 12 months to May 2013.
To improve customer satisfaction, it has built and upgraded more than 1,331 retail branches and it has also continued to develop its online services. At the end of 2012, ICBC had 315 million e-banking customers and more than seven out of every 10 transactions are now done online instead of over the counter — saving both time and money.
It also grew its market-leading custody business by 30% in terms of assets under management during 2012 and launched innovative wealth management bond funds as well as the first cross-market exchange-traded fund.
Together, this helped boost its net profit by 14.5% in 2012. Return-on-weighted average equity and return-on-average assets were largely steady at 23%, but in a definite sign of strength the ratio of non-performing loans fell and its tier-1 capital ratio improved slightly.
BEST INVESTMENT BANK
China International Capital Corp doesn’t have the same underwriting volumes in the domestic market as Citic Securities does, but its M&A advisory business does stack up. It acted as a financial adviser on 34 deals worth more than $32 billion that were announced in the past 12 months, which puts it second only to Citi in the China M&A league tables. It falls a couple of spots when looking at completed deals, but is still well ahead of its domestic peers.
Deals it worked on in the past year include Shenhua Group’s $7.9 billion acquisition of a coal power generation and management company from State Grid Corp, and Midea Group’s purchase of the remaining stake in listed Guangdong Midea Holding via a general offer to minority shareholders worth $5.1 billion.
Together with a solid domestic equity and debt capital markets business, we feel its advisory work does make it the best all-around investment bank in China today.
Perhaps as a nod to its roots as China’s first Sino-foreign securities JV, CICC is also becoming a more frequent participant in equity capital markets transactions for Chinese companies in Hong Kong. In addition to a number of joint bookrunner mandates, it acted as a joint global coordinator both on PICC Group’s $3.6 billion IPO in December and on Fosun Pharmaceutical’s $512 million IPO a couple of months earlier. This franchise has been further strengthened by the hiring of new talent from its foreign competitors, including non-Chinese bankers.
In the A-share market, it helped arranged private placements for China Eastern Airlines and Bank of Communications and a convertible bond for China Shipbuilding Industry, while in the domestic bond market it was involved in three of the top five deals.
BEST BOND HOUSE, BEST EQUITY HOUSE
As a top underwriter of both equity and debt deals in China, Citic Securities was a fairly easy pick for both these awards. And thanks to its deep involvement in both these asset classes it has remained busy even as the primary A-share market has slowed right down due to the absence of new IPO approvals since last autumn. The firm did arrange a couple of smaller new listings for Citic Heavy and First Tractor in June and July last year before the regulators pulled the plug, but since then it has focused on follow-on offerings such as Industrial Bank’s Rmb23.7 billion private placement in January. According to Dealogic data, Citic Securities worked on a total of 14 ECM deals during the past 12 months and had a leading market share of 10.7%.
On the debt side, it participated in nine out of the 10 biggest corporate bonds as well as another 78 transactions, which resulted in enough league table credit to beat all but one of the domestic lending banks (China Development Bank) in terms of the total amount underwritten.
At the same time, Citic Securities has stepped up its game in private structured financing transactions and is now a frontrunner among the domestic securities firms in this area. This shows that it is keen to leverage its current position and move into new products as and when they become available.
During the awards period, it has also become more active with regard to offshore renminbi bonds in Hong Kong and had a joint bookrunner role on deals for Future Land Development and China Cinda Asset Management.
Its domestic equity franchise is underpinned by a leading position in retail and institutional brokerage, and a widely-recognised research team that covers about 960 A-share companies as well as sector trends and themes. Citic Securities also has a large and strong client base and deep connections with China’s investor community, which has been helpful in terms of navigating the challenging equity market environment in the past year.
BEST FOREIGN COMMERCIAL BANK
HSBC reclaims this award after losing it to Citi last year when the US bank was displaying strong momentum in China. However, despite its significantly larger base, HSBC is once again growing faster than its foreign peers with deposits and loans up by 16.5% and 18.6% in 2012, total assets improving by 11% and net profit increasing by 11.7%.
It remains the market leader when it comes to helping Chinese companies tap the offshore debt capital markets and has launched a number of new initiatives to help the expansion of Chinese companies abroad and of international companies in China — particularly with regard to the continuing internationalisation of the renminbi.
In January it became the first foreign bank to receive regulatory approval to implement a pilot foreign currency cross-border netting solution, which allows companies to offset their FX payables and receivables in China against their offshore positions. Another first is the gross in/gross out renminbi cross-border payment and collection solution that it completed for a Fortune 500 company in March, which will eliminate FX exposure and will ultimately also help boost the circulation of renminbi overseas.
Citi has arguably made a leap in retail banking after becoming the first foreign bank to be able to issue credit cards in China under its own name, but HSBC maintained its number one ranking for the third straight year in an Ipsos survey of customer recommendations. It also grew its Premier and Advance customer base by 11% and 56% respectively in 2012, and increased its revenue per Premier customer by 8%, showing that it is able to attract retail and private wealth customers in China by other means.
BEST FOREIGN INVESTMENT BANK
A strong and well-diversified domestic China franchise is what tips the scale in favour of UBS this year. The Swiss investment bank, which has had an on-the-ground presence through its UBS Securities entity since 2007, has made better use of its domestic licences during the past 12 months than any of its foreign competitors, while at the same time continuing to line-up deals for Chinese clients in the offshore markets.
In particular, it has carved out a significant niche for itself in the onshore debt capital markets where it has helped arrange 25 bond deals — almost twice the number of the closest foreign bank. While it didn’t participate in the three biggest deals, UBS’s client list included China Life Insurance, Air China and Sinochem, as well as IPO-hopeful Huishang Bank, which shows the level of confidence that top Chinese enterprises have in its work.
It also amassed $2.9 billion of league table credits in the A-share market through its work on five deals, including a placement in Bank of Communications and an A-share convertible bond for Minsheng Bank. While the sample size was rather thin due to the moratorium on A-share IPOs since last autumn, this was close to twice the volume of the second foreign bank and puts UBS fourth in the overall ranking behind three of China’s biggest securities houses.
On the M&A front, it worked on 20 completed deals, including the complex asset acquisitions by Sinopec and China Telecom, Haier’s takeover of New Zealand’s Fisher & Paykel Appliances and the privatisation of Focus Media, which ranks as the largest-ever leveraged buyout of a US-listed Chinese company. This resulted in a top-three position the league tables.
It is also one of the leading arrangers of Chinese ECM and DCM deals in the offshore market, which means it has the ability to support its Chinese clients irrespective of which market they are targeting.
BEST BANK, BEST BOND HOUSE, BEST EQUITY HOUSE, BEST FOREIGN EXCHANGE BANK, BEST INVESTMENT BANK
HSBC once again collects accolades this year for maintaining its leading position in the city in both commercial and investment banking businesses. While it continues to dominate the bond market, the bank is also now well-established as a bookrunner or global coordinator on Hong Kong deals along with its international peers.
According to Dealogic, HSBC ranks fourth on Hon Kong IPOs and sixth on overall equity capital markets during the awards period. Although the IPO activity in Hong Kong has slowed down since 2009-2011, when the city was the top destination for new listings globally, the bank took part in the city’s key deals during the review period, having taken a joint sponsor and joint global coordinator role for PICC Group’s IPO in November of last year. The bank also made sure to be part of a list, albeit long, of joint bookrunners for the billion-dollar-plus offerings this year by Sinopec Engineering and China Galaxy Securities. Leveraging on its lending relationships with clients and its dominant presence in Hong Kong, HSBC’s primary capital equity business continues to contribute to its overall business.
The bank’s debt business also continues to stay on a strong footing — it completed 28 Hong Kong dollar-denominated deals during the review period, compared to 16 for its closest competitor. It also topped the league table for both US dollar-denominated Hong Kong deals and US dollar-denominated Hong Kong high-yield transactions. Among key Hong Kong-dollar deals, HSBC acted as the sole lead manager and bookrunner for Nan Fung’s HK$800 million offering, as well as for Regal Reit’s HK$775 million offering. Elsewhere, HSBC acted as a joint lead manager and joint bookrunner for Hutchison Whampoa’s €1.75 billion perpetual subordinated capital securities. The bank also played the role of an active bookrunner and lead manager for AIA Group’s $1 billion bond offering, and a joint lead manager and bookrunner for Sinopec Group’s $3.5 billion bond offering.
On the M&A front, leveraging on its knowledge of the local market and its global network, it continues to provide advisory services to its major clients in Hong Kong across sectors. HSBC acted as the sole financial adviser to Pacific Century Group’s $2.14 billion acquisition of the Hong Kong, Macau and Thailand insurance businesses of ING Group, making use of the bank’s full suite of global banking and markets service. It also acted as the sole financial adviser to China Merchants Holdings on its $540 million acquisition of a 49% stake in Terminal Link.
HSBC’s commercial banking side is also continuing to grow. Including its Hang Seng Bank subsidiary, total revenues jumped by 23.5% in 2012 from a year earlier, and net income was up 17.7%. Total assets grew by 9.7% and total loans by 9.6%. The non-performing loan ratio inched down to 0.2%. In the retail banking and wealth management, HSBC remains the number one provider of funds linked to Hong Kong’s Mandatory Provident Funds, a mandatory pension system.
In the global asset management segment, it launched the Asia Focused Income Fund in May last year, which is now one of the best-selling multi-asset funds in the Hong Kong retail sector. The fund has raised more than $1.4 billion since its launch. In March this year, the Asia Focused Conservative Fund and the Asia Focused Growth Fund were added to the series to complement the HSBC Managed Solutions offering range.
Last year, HSBC’s FX division serviced more than 16,500 institutions and companies in Asia, with the turnover up by 10%. The division operates out of Hong Kong in Asia, and has more than 350 FX sales and trading staff in the region, servicing corporate, institutional and retail customers.
The bank services more than 600,000 commercial banking clients in the region, and last year its FX options business with this type of clients grew 114% year-on-year in turnover. On the retail front, it serviced more than 4.5 million customers, and 90% of the business is coming through its existing Premier accounts. The FX business accounts for more than 50% of its global markets sales franchise, contributing to the growth of the group.
BEST FOREIGN COMMERCIAL BANK
Citi’s position as the leading international bank in Hong Kong hasn’t budged. It has more than 4,000 active corporate customers, and continues to improve its services. In this category, HSBC and Standard Chartered, its strongest competitors in the rest of Asia, are considered to be domestic banks. That clearly helps, but Citi once again continued to grow, and posted a rise in revenues and profits in 2012.
Citi’s securities and fund services business had a record year last year in terms of the number of large mandates from marquee clients. For example, it was the sole provider to the world’s first cross-border Rmb-denominated and RQFII-based (Renminbi Qualified Foreign Institutional Investors) ETF that directly invests in physical A-shares, listed in Hong Kong. It is also the first to offer end-to-end post-trade solutions for broker-dealers in Asia Pacific, including Hong Kong.
In the treasury and trade solutions business, Citi is shifting its focus to fee- and asset-based products from liability-driven ones, as it provides integrated payment solutions with exotic currency capabilities, wholesale card solutions with customised features and supply chain financing to corporate clients.
With 41 branches, Citi’s Hong Kong retail business continues to expand through the launch of new commercial bank service centres and international personal banking centres.
On the ECM front, it executed 13 deals with a transaction volume of $3.3 billion during the awards period, while it completed eight US dollar-denominated Hong Kong debt transactions worth $1.2 billion, according to Dealogic. Highlights include its role as a joint bookrunner for Langham Hospitality Investments’ $549 million IPO and joint global coordinator for the $337 million fully-marketed top-up placement of Melco Crown Entertainment’s Melco Crown (Philippines).
BEST FOREIGN INVESTMENT BANK
UBS takes the mantle as the best foreign investment bank in Hong Kong this year because of its consistently solid performance across products. At the time of extreme volatility in the global financial markets, the bank’s diversified portfolio of deals and products adds to its strength.
This is a very competitive category, with other firms also bringing high-quality products to the table. For example, Goldman Sachs was particularly strong in ECM during the review period, led by follow-on deals, while J.P. Morgan continued to be competitive in M&A and debt, according to Dealogic data. But UBS was strong on IPOs, and in the end, it was its consistent performance across products, as well as its relationships with China-related Hong Kong blue-chip companies, that gave the bank an edge for this award category.
In ECM, it worked on Sinopec Engineering’s $1.8 billion IPO as a joint sponsor and joint global coordinator, while it was a joint bookrunner for the offerings by China Galaxy Securities and PICC Group. It played the role of a joint global coordinator for both Esprit’s $667 million rights issue and CLP’s $982 million placement.
Key M&A deals included Hong Kong Exchanges & Clearing’s (HKEx) $2.2 billion acquisition of the London Metal Exchange. The bank acted as a joint financial adviser to HKEx. On the debt side, UBS played the role of a joint global coordinator for CNOOC’s $4 billion offering, and Sinopec Group’s $3.5 billion offering. It also played the role of a joint bookrunner and lead manager for Sun Hung Kai & Co’s $450 million bond offering.
India’s second-biggest private-sector bank stands apart from its bigger rival, ICICI, thanks to its clean balance sheet, strong lending growth and big margins.
It is also the epitome of stable growth. HDFC’s latest annual report comprises page after page of charts that all rise smoothly in the right direction. Indeed, the pretty charts almost obscure the extraordinary pace of growth. HDFC’s profit has risen by more than 30% for the past two financial years and has been consistently growing at double-digit pace for the past decade.
This is supported by the similarly rapid expansion of its lending book, which grew 22.7% during the most recent full financial year. The bank continued its organic expansion by opening 518 branches during the year.
That makes it one of the fastest-growing banks in the country, despite already being its third biggest. It is also one of the most efficient, with a return on equity of around 20% and a net interest margin of 4.5%.
At the same time, its strong underwriting standards have allowed it to navigate the global financial crisis with a non-performing loan portfolio that peaked at about 2% of total loans in 2009, and is now back to less than 1%. Total Basel II capital adequacy ratio stood at 16.8%, well above the regulatory minimum of 9%. Tier-1 capital is 11.1%.
BEST INVESTMENT BANK, BEST BOND HOUSE, BEST EQUITY HOUSE
Axis Capital/Axis Bank
Axis Capital is a new entrant to India’s investment banking sector, formed through the integration of Enam Securities with Axis Bank. It is already a powerhouse, combining Axis Bank’s commercial banking and debt capital markets franchise with Enam’s investment banking and equities franchise.
The new entity was formally launched only in October, but the two banks’ combined track record during the period under review suggests that Axis is set to become a strong new force in Indian investment banking. Among the domestic players, Axis tops the league tables for equity capital markets, local-currency debt capital markets and investment banking share of wallet.
In ECM, Axis now has a leading position across institutional and retail distribution thanks to the marriage of Enam’s securities expertise with Axis’s banking network. Transactions since the two banks tied up include the government’s sale of a Rs60 billion stake in NMDC, in which Axis says it was instrumental in generating a fifth of the demand for the deal, and Bharti Infratel’s Rs42 billion initial public offering, both in December.
It also has several top-ranked analysts providing equity research to clients within India and made some decisive calls during the year on names such as ICICI, Godrej Consumer and Sun TV.
In DCM, Axis Bank is already an established player with a dominant franchise. According to Dealogic, its share of rupee-denominated deals is almost double that of its nearest competitor, ICICI. Significant deals during the year included a host of high-quality names, such as Jindal Saw, Hindalco Industries, Sterlite Industries India and HPCL Mittal Energy.
In M&A, although it trails Kotak and JM Financial, it is still a presence toward the top of the league tables thanks to roles on deals such as PVR’s Rs5.4 billion acquisition of Cinemax India and Future Group’s Rs7.6 billion sale of Future Capital to Warburg Pincus.
BEST FOREIGN COMMERCIAL BANK, BEST FOREIGN INVESTMENT BANK
Citi’s well-defined strategy has paid off in India. Its network spans 42 branches across 30 cities and comprises 1.2 million retail customers, 1.6 million credit card customers and 47,000 commercial banking clients.
The bank reported a pre-tax profit of $607 million for the financial year ending March 2012, up 37% from the previous year, and has a $23.3 billion balance sheet that is supported by a capital adequacy ratio of 16.03% and, after suffering from a move into riskier lending, is now focusing on prime customers and has a bad loan portfolio of less than 1% of its total loans.
Citi also has the highest revenue per branch among the foreign banks, is a leader in the cards segment with a near 20% share of industry spends and the highest spend per card, and is also a leader in the non-resident Indian business with $8.9 billion under management.
Citi was among the first foreign banks to have a dedicated strategic business unit focused on emerging Indian corporates. It has the biggest volume in cash payments and collections among the foreign banks, and is custodian to 50% of Indian asset managers, as well as being the biggest international bank in the foreign exchange market in India.
But the bank’s most impressive achievement during the past few years has been the conversion of this successful commercial banking franchise into a market-leading investment banking business. According to Dealogic league tables for the period under review, Citi has the leading ECM business among the foreign banks, is the number one adviser to domestic M&A deals and tops the table for dollar DCM.
This breadth of ability shows up in its track record, which includes Vedanta’s $1.7 billion bond offering to refinance its Cairn India acquisition, the $170 million JustDial IPO, Reliance’s $800 million true perpetual offering (a first for Asia) and Diageo’s acquisition of United Spirits, among many others.
It was the only bank on all three of the biggest government transactions, for NMBC, Oil India and NTPC.