CHINA
BEST BANK
ICBC
It’s not the first time Industrial and Commercial Bank of China has won FinanceAsia’s award for Best Bank in China. This year, the bank has not only developed in the domestic market but has also managed to diversify and internationalise its business.
ICBC changed its strategy a few years ago to focus on financial services that need intensive professional knowledge and technologies such as private banking and commission-based advisory services; and those that provide more value for customers. These have become new drivers in the bank’s profit growth.
For example, income from investment banking services, including advising on M&A and restructuring deals, rose 43% in the past year. The bank overall recorded a 15.3% increase in net fee and commission income, representing 21.13% of operating income.
Geographically, ICBC has developed its businesses into new areas. It acquired 20% of Bank SinoPac in Taiwan, 60% of Standard Bank Group’s London subsidiary, as well as 77.5% of Tekstil Bankasi in Turkey.
The bank issued Rmb8.7 trillion in loans during the awards period, Rmb974 billion more than in 2012. Loan turnover was further accelerated.
The bank helped small and medium-sized enterprises, particularly those from industries such as advanced manufacturing, media and culture, and modern services, by providing strong support to meet their diverse needs.
Among other things, the lender did pay attention to possible bad loan problems and strengthen risk management. Its provision coverage ratio reached 257%, a top level in the international banking community, although the non-performing ratio edged up 0.09 percentage points to 0.94%. The bank was included for the first time in the list of global systemically important banks by the Financial Stability Board in 2013.
Together, this helped boost net profit by 10.2% in 2013. Return-on-weighted average equity and return-on-average assets were largely steady at 22%, and both its core tier-1 capital adequacy ratio and tier-1 CAR were 10.57%.
BEST INVESTMENT BANK, BEST DCM HOUSE
Citic Securities
Citic Securities, China’s largest brokerage in terms of total assets, won FinanceAsia’s nod this year after it leveraged opportunities created by its IPO in Hong Kong and the acquisition of well-known brand CLSA.
It doesn’t have the same transaction volumes in the A-share ECM market as major rivals CICC and China Securities but it did a better job in DCM and M&A.
It wins for Best Bond House not because of its underwriting volumes – it ranked third after two state banks in deal size but still tops Chinese securities houses by underwriting 86 bond deals worth of $20 billion – but because of its ability to cover the full range of debt instruments.
The bank has helped in a series of milestone transactions, such as the first extra-long-term (15 years) medium-term notes (MTN) of Nanjing Construction Investment, the first financial bonds from a foreign auto finance company – the Rmb1.3 billion financial bonds of Toyota – as well as the first-disclosed real estate investment trust (Reit) product in the domestic market.
The securities house is also heavily devoted to the development of China’s inter-bank market, which accounts for more than 90% of the domestic bond market in terms of market share and traditionally is dominated by big state banks.
Its M&A advisory business has performed well this year. It helped in 20 deals worth $21.8 billion, which puts it well ahead of domestic peers. It advised on Shuanghui International’s purchase of Smithfield Foods for $4.7 billion, the largest Chinese takeover of a US company, as well as Media Electronic’s merger with Media Group in a Rmb30.6 billion deal – the largest onshore M&A deal of 2013.
The securities house has also been part of the restructuring story of big state-owned enterprises due to its solid state background and client relationships, as well as the strong underwriting capabilities.
It has been mandated in the $28.4 billion share placement for funds for Citic Group’s shifting assets to Hong Kong, and the $13 billion sale of PetroChina’s assets in oil pipelines to investors.
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 ECM HOUSE
CICC
China International Capital Corp maintained momentum in its equity business this year in spite of a weak capital market. The investment bank ranks second in the Dealogic ECM league table for both mainland China and Hong Kong.
CICC led on 10 A-share equity deals of $5.3 billion, including the largest IPO since the market reopened, of Shaanxi Coal Industry, and the A+H jumbo rights issue of China Merchants Bank, the largest rights issue in Asia ex-Japan since 2011. It also helped in the domestic and H-share rights issue of PICC Property and Casualty, the largest P&C insurer in the country.
The bank has stepped up its game in the financial advisory business and has become a frontrunner among investment banks in conducting M&A deals. This in turn has helped CICC win new listings deals or follow-on offerings from its clients.
For example, it has been mandated as one of the advisors on Sinopec’s restructuring and is expected to also handle the sale of the SOE’s assets to institutional investors later on.
Having long provided investment banking services to XD Electric, CICC helped to devise the deal structure for XD Electri’s private placement to GE Electric at an impressive 13% premium to the secondary trading price.
The bank is also actively developing clients from high-growth industries such as TMT, in addition to maintaining its traditionally strong ties with SOEs. It helped at least three technology companies list in Hong Kong during the awards period.
BEST FOREIGN INVESTMENT BANK
Goldman Sachs
A more diversified and well-balanced business development in China this year helps Goldman Sachs win the award. The investment bank, which was first established in the country as a representative office in 1994, has positioned itself as a one-stop platform on the mainland, while at the same time lining up deals for Chinese clients in offshore markets.
In terms of ECM, Goldman has helped arrange 4 domestic deals worth $3.5 billion and 32 cross-border equity deals worth $5.1 billion during the time period, ranking first in equity and equity-linked offerings among foreign investment banks.
It joined the largest rights issue in Asia ex-Japan since 2011 – China Merchants Bank’s $5.5 billion A+H rights offering – and helped in the largest convertible bond globally since 2011 – Ping An Insurance’s $4.3 billion A-share CB.
Goldman Sachs also amassed $4.9 billion of league table credits in the mainland market through its work on 30 deals, including three jumbo US dollar bond offerings by Sinopec Group, and Tianjin Binhai Rural Commercial Bank’s landmark Rmb1.5 billion offering, China’s first domestic Basel Ш capital instrument.
In M&A, Goldman Sachs ranks third in China’s M&A advisory banking, following Morgan Stanley and Hong Kong-based financial advisory service provider Somerley. Its clients not only include large state-owned enterprises such as State Grid, Sinopec and Citic Capital but also privately owned new economy firms such as Alibaba, Tencent and Lenovo.
Through an integrated team across both offshore and onshore markets, Goldman Sachs has shown commitment to its China business and its ability to support its Chinese clients in business development in either market.
BEST FOREIGN COMMERCIAL BANK
HSBC
HSBC once again wins the award for maintaining its leading position in China by spearheading financial solutions amid regulatory and renminbi internationalisation. It posted a 22.6% increase in total assets and a 21.5% rise in net fee and commission income.
The bank has the largest network of outlets among all foreign banks in China, 165, as well as the widest geographic reach, covering 52 cities nationwide, as of the end-May. It ranked number one again this year in terms of customer recommendation in the market, based on Ipsos research.
In addition to the expansion, the bank continues to capitalise on its franchise as the only foreign bank to underwrite commercial paper and medium-term notes in China. It has executed 30 such deals with an aggregate amount of more than Rmb100 billion this year.
It remains the market leader when it comes to helping Chinese companies tap 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 opened a sub-branch in the Shanghai Pilot Free Trade Zone and has since introduced a number of innovative cross-border solutions in the zone. For example, the bank is among the first institutions in China to offer a centralised renminbi cross-border transaction management solution for corporate clients in the zone.
It was the first foreign bank to complete a two-way renminbi cross-border intra-group lending transaction with Taiwan under the Kunshan renminbi pilot programme. It also acts as one of the first market makers for direct trading of the renminbi and New Zealand dollar in China’s interbank foreign exchange market.
It was custodian of 40.58% of the total approved RQFII quota set by the regulator as of end-April.
In retail banking and wealth management, the bank increased sales and broadened product diversity. It launched enhanced yield investments, which can be traded on a real-time basis. It was also among the first batch of foreign banks to distribute local domestic mutual funds to retail investors in China.
HONG KONG
BEST BANK, BEST INVESTMENT BANK, BEST BROKER, BEST FOREIGN EXCHANGE BANK, BEST ECM HOUSE, BEST DCM HOUSE
HSBC
HSBC grew revenues globally while continuing to cut costs and exiting businesses where it lacks critical mass. This was helped by greater collaboration between the investment banking and commercial banking sides of the business.
Hong Kong was at the forefront of this push during the review period as HSBC is the territory’s largest corporate broker by a long stretch. HSBC Hong Kong continued its dominance in debt capital markets while offering commercial banking clients more advice on equity capital markets and potential mergers and acquisitions.
Investors using HSBC’s brokerage services enjoyed more access and insight into a wider range of Asian companies.
High-profile mandates included advising long-time corporate client Hutchison Whampoa on a tricky carve-out of AS Watson and the subsequent US$5.7 billion sale of a 24.95% stake to Singapore’s Temasek. HSBC handled the foreign exchange aspects of the sale too.
In addition, HSBC advised CLP Holdings on its US$3.9 billion acquisition of a further 30% interest in Castle Peak Power.
In terms investment banking revenues, HSBC was again ranked number one during the review period, with a market share of 18.3% compared with its nearest competitor Goldman Sachs on 10%.
In DCM, HSBC was also a clear winner. HSBC was ranked number one both for G3-currency bonds issued by Hong Kong companies and for those issued by mainland Chinese names. It was number one too for US dollar bonds by Chinese high-yield issuers as well as for Hong Kong dollar bonds and offshore Chinese renminbi bonds.
HSBC led all deals about US$200 million G3 transactions for Hong Kong borrowers during the award period. In the Hong Kong dollar bond market it executed more than half of the deals priced, resulting in a market share of 54.8%, about 10 percentage points more than last year.
HSBC wins Best FX house due to its successful internalisation of flows. This helped it ride out volatile markets and provide uninterrupted service to its clients. HSBC recorded impressive year-on-year volume growth during 2013 in target FX products by closely working with other parts of the HSBC group.
HSBC walks away with Best Broker award as well, benefiting from its push for greater joined-up thinking, which has improved its ability to share flow data and provide retail and private banking clients with the right advice. The brokerage can now also offer clients greater access and insights into a wider range of companies – it is organizing smaller events than its peers with more c-suite executives as well as its own top people.
In addition, HSBC is doing a better job at managing risk by recycling volatility from wealth management products to hedge fund clients. It has built out its prime brokerage since 2012, expanding services to hedge fund clients, particularly long/short equity strategies in Hong Kong and mainland China.
One of the attractions for hedge funds is that HSBC can access its private bank’s exclusive inventory of stocks. At the same time, HSBC’s private bank is one of the world’s largest investor in hedge funds.
BEST FOREIGN INVESTMENT BANK
Goldman Sachs
Goldman Sachs wins this category because it played a leading role on a plethora of landmark deals, the most eye-catching of which was as sell-side adviser to Hutchison Whampoa on its sale of a $5.7 billion stake in AS Watson in March to Temasek, the largest M&A deal in Hong Kong since 2008.
Goldman Sachs’ Hong Kong office, established in 1984, has long advised some of China’s most prominent businesspeople and companies. The US investment bank has led the last 11 consecutive capital market financings for Sinopec, including the $2.75 billion and 550 million-euro senior notes issued during the review period.
Goldman Sachs was also sell-side adviser on OCBC’s $5 billion acquisition of Wing Hang Bank announced April 1. This was the largest financial institutions M&A transaction in Hong Kong since 2001 and the largest take-private in Asia since 2008.
Among its initial public offerings, Goldman Sachs played a key role in the first Chinese distressed asset management firm to go public: China Cinda Asset Management’s $2.8 billion H-share IPO in December. Shares sold like hot cakes as Goldman Sachs and its syndicate partners talked-up the company’s ability to make money even if China’s economy slowed.
Unusually for a China financial institutions deal it priced at the top of the marketed range, helped by Goldman Sachs’ introduction of global distressed debt investor Oaktree Capital Group into the deal, which lent credibility to the investment story.
Goldman Sachs won a coveted role as one of just two banks on the territory’s largest IPO since 2010: Hong Kong Electric’s $3.1 billion share sale in January. The deal had a rocky debut due to heightened investor concerns over the Federal Reserve’s gradual lifting of its bond-buying programme, which sent waves across global markets, but Goldman Sachs helped to make it a success by securing $1.1 billion cornerstone investment from State Grid. It was the largest single-cornerstone investment since the IPO of Agricultural Bank of China in 2010.
This smorgasbord of deals added up to Goldman ranking second only to HSBC in Hong Kong in terms of investment banking revenues, taking a 10% market share.
BEST FOREIGN COMMERCIAL BANK
Citi
Citi’s transaction services and consumer banking divisions continued to provide a stable and predictable source of funding, which enabled Citi to continue growing its Hong Kong loan book steadily through the year.
Amid a clamping down on costs globally, Citi Hong Kong remains one of the bank’s most efficient franchises with a cost-to-revenue ratio that is below the parent group’s.
But that hasn’t stopped Citi Hong Kong from continuing to invest in targeted areas. Established in 1902, Citi Hong Kong has its eye on one of the biggest long-term opportunities – the internationalisation of the renminbi. Revenues are growing fast, particularly in trading and placements.
Citi is also helping develop the offshore renminbi, or CNH, market. In late 2013 Citi Hong Kong implemented the first CNH/dollar cross-currency swap based on the CNH Hong Kong Interbank Offered Rate. Helped by its treasury and trade solutions business it has a respectable share of offshore renminbi flow. Its markets team is a major liquidity provider in the CNH foreign exchange market and a market maker in dim sum bonds – bonds denominated in offshore renminbi.
Citi, already the largest foreign banking employer in Hong Kong with a workforce of more than 4,000, is also helping the development of Hong Kong as a financial hub and of Macau by offering its advice on anti-money laundering and by adding resources to its internal auditor.
Citi broadened its franchise this year by sealing a 15-year bancassurance partnership with AIA and launching a mobile-payment service with Hutchison’s 3 HK. Citi deepened its relationship with these partners in other ways too by offering investment banking advice and advised Cheung Kong on its A$4.5 billion May acquisition of Envestra.
Citi’s historical strength has been guiding US companies into China – now it is also doing an admirable job in reverse, helping Chinese companies expand. Their first step is often into Hong Kong.
Citi’s investment bank put in a strong showing during the review period. Debt was clearly a strength particularly advising on capital raising offshore by Chinese developers. It was joint bookrunner on Greenland Hong Kong’s US$700 million bond in October.
On the equity side it took a leading role on Kerry Properties’ spin-off of Kerry Logistics Network in a US$329 million IPO last December. In M&A it advised PCCW on its US$2.4 billion acquisition of CSL in December.
Citi’s Treasury and trade solutions division scored some big wins: in March the Hong Kong government re-appointed Citi to facilitate small value purchases for all government departments and bureaus.
BEST CHINESE INVESTMENT BANK IN HONG KONG
Citic Securities International
Citic Securities wins this award for being the first Chinese securities firm to establish an overseas distribution network and manage a cosmopolitan team.
In July last year Citic Securities sealed its purchase of Asian brokerage CLSA, marking the first Chinese securities house to make a major overseas acquisition.
The motivation seems sound as the combined company is well positioned to help Chinese companies looking to raise capital offshore. Citic Securities is gathering credentials in cross-border M&A with group-related deals, including its own complicated and drawn-out negotiations with Credit Agricole to buy CLSA. It also advised Citic Telecom on its acquisition of a 79% stake in Companhia de Telecomunicações de Macau.
In an industry renowned for rocky relationships between merger partners and a fast exodus of talent following an acquisition, the combination of CLSA and Citic Securities seems to be working well.
Citic Securities deserves credit for realizing that the best tactic would be to not integrate CLSA and let the often-flamboyant staff keep their own brand. As a result CLSA continues to do what it does best – broker stocks.
Both teams worked on deals such as IPOs for Huadian Fuxin and Macau Legend.
In a competitive environment where other Chinese banks still generally appear only in junior roles on IPOs, Citic Securities and CLSA played a leading role on Poly Culture’s $380 million IPO in March.
BEST CHINESE BROKERAGE IN HK
Haitong International
Haitong International wins this award because its well-established equity brokerage network in Hong Kong was supercharged during the review period with product originated by its growing investment banking division.
Established in 1973, Haitong International is the largest-listed China-backed Hong Kong securities firm in terms of total revenue and total assets.
Haitong International used its ability to reach retail brokerage clients through its 10 branches in Hong Kong and Macau to good effect. It secured a role on such high-profile IPOs as Harbin Bank, China Everbright Bank, and Huishang Bank.
Haitong International’s growing prowess across investment banking products was demonstrated by its advice to developer Times Property on its $200 million IPO in Hong Kong in December and on its subsequent $225 million high-yield bond and $80 million re-tap in March and April, respectively.
The results are showing: Haitong International recorded a 42.33% compound annual growth rate in net profits between 2010 to 2013 while its net profit margin expanded from 20.8% for the year ended 2010 to 35.3% for the year ended 2013.
BEST CHINESE ECM HOUSE IN HK
Citic Securities International
Citic Securities International stood out from the competition in Hong Kong to bag the inaugural award.
When Citic announced plans two years ago to acquire Hong Kong firm CLSA for $1.25 billion, some were sceptical. The deal, finalized last summer, was the first large acquisition of a foreign broker by a Chinese competitor, and it was not an obvious union.
CLSA was founded by two former journalists and gained a reputation for strong, independent research. Citic, on the other hand, was founded by state-owned Citic Group and is China’s leading investment bank.
The reasoning for the acquisition was obvious. Citic has strong corporate relationships in the mainland but sought to improve its global distribution network, increase access to international markets and lift its share of Hong Kong’s lucrative IPO market. Most of the questions centred on how the integration would actually work.
Thus far, the partnership has proven successful — it allowed Citic to partner its mainland franchise with CLSA’s international client base, and CLSA to simultaneously offer its services to Citic’s Chinese clients.
Once the acquisition was complete, Citic/CLSA handled the Poly Culture and Macau Development Legend flotations, two of Hong Kong’s best performing IPOs this year.
The strength of the banks’ joint distribution capabilities became apparent early on in Poly Culture’s bookbuild process. The retail portion was oversubscribed by 605 times, which in turn led China’s largest auction house to exercise the greenshoe option and raise an additional $50 million.
Citic, which acted as sole sponsor, and CLSA, which acted as sole bookrunner, also locked in the National Social Security Fund (NSSF) as the only cornerstone investor, the first cornerstone investment by the government-controlled investment fund in six years.
Most impressive was the aftermarket performance. After raising $331 million on February 28, Poly Culture shares rose 23% on the first two days of trading. It was the best aftermarket performance on a listing debut in Hong Kong this year. After the initial spike, shares settled down to around the IPO price of HK$33 and hovered there for nearly two months, showing that the banks nailed the pricing.
Another landmark transaction last year was hotel and casino operator Macau Legend Development’s IPO. CLSA acted as sole sponsor, and both CLSA and Citic handled joint global coordinator roles along with Credit Suisse.
The issuer and banks managed to complete the IPO despite extremely volatile market conditions at the time sparked by hints the US Federal Reserve would begin tapering its bond purchase programme. Since the flotation last summer, shares are up 115%.
BEST CHINESE DCM HOUSE IN HK
Bank of China International
Bank of China International’s footprint in the debt capital market space has grown tremendously over the past few years, and has even surpassed many of its international rivals when it comes to attracting Chinese corporates into Hong Kong. For a valid reason too — its extensive connections onshore.
In the DCM overall ranking in the Chinese investment grade corporate space for G3 currency bonds, BOCI is third with a market share of 9.2% behind its foreign rivals HSBC (9.8%) and JPMorgan (9.3%), according to Dealogic data. For the dim sum bond market, it’s also third with a market share of 10.1%, behind HSBC (17.3%) and Standard Chartered (11.5%), making it a strong contender for this category when compared to other fellow Chinese banks.
BOCI also aims to be on top when it comes to the selection of bond offerings to be on and it’s no luck that it’s the only Chinese bank that is on the top three largest dollar-denominated deals from state-owned Mainland corporates so far this year. The bank was on Sinopec’s $5 billion five-tranche bond, Cnooc’s $4 billion and State Grid’s $3.5 billion triple-tranche note. This showcases the bank’s capability to bring well-structured deals to the market.
The same could be said the same for the CNH space, where BOCI helped with several other landmark transactions, including China Power International’s — the first Chinese issuer from the power sector — Rmb2 billion ($320 million) dim sum bond in April and Chinese Orient’s — the first Mainland-based asset management company to come offshore — Rmb2.5 billion note in January this year.
TAIWAN
BEST BANK
Mega International Commercial Bank
This award was one of the most competitive categories this year.
Strong competitors include CTBC Bank, which is aggressively acquiring assets overseas, Taipei Fubon Bank, which benefits from strong support from Fubon Financial Holding, and E.Sun Bank, which has a unique shareholder structure managed by financial professionals without government or family ties.
Mega International Commercial Bank (Mega ICBC) was finally given the award mainly because it has gained decent growth in revenue, loans and deposits in the past year, an achievement that needs to be highlighted given that its scale is already very impressive.
The lender has $93 billion in total assets with a growth rate of 15.63%. Its total loans and deposits rose 8.8% and 12%, respectively. The coverage ratio amounted to 794.4%, higher than its peers.
Mega ICBC focused more on earning instead of business volume. Based on this strategy, the bank’s annual budget set the earnings target for business units without setting the operation volume target. By doing so, the bank produced pretax income that beat other domestic banks during last two years; meanwhile its market shares of main business segments remain the same.
The bank has also managed to diversify its financial services offerings to generate high yields under the low interest rate spread environment. This is very important in an overbanked economy such as Taiwan, where the interest rate spread has long been around 1%.
It maintains the highest renminbi deposit balance among domestic banks, since the debut of the renminbi deposit business started in Taiwan in February 2013. It also ranked number one in foreign currency deposits, as well as import/export letters of credit and guarantee businesses.
Expanding is another way to gain profits. Mega ICBC was one of the earliest to develop businesses overseas, and now its overseas branches and offshore banking units (OBU) generate about 63% of group profits, the highest percentage among Taiwanese banks.
During the past year, the bank opened a branch in Thailand and a sub-branch in Cambodia, expanding its network to 35 branches in 19 countries and areas.
Mega ICBC also has support from its holding company. Last December, the bank issued new shares through a capital injection to the Mega Holding Corp and raised funds of $500 million for the purpose of business expansion.
BEST INVESTMENT BANK, BEST ECM HOUSE, BEST DCM HOUSE
KGI Securities
Although these three awards are always the most competitive, this year KGI Securities won all of them convincingly. It ranked top in terms of volumes for ECM, DCM, M&A deals, as well as IB revenue, among all Taiwanese securities houses and investment banks. In doing so it beat its biggest rivals Yuanda Securities, SinoPac Securities and CTBC, during the awards period.
The reason KGI Securities has been so successful is that it merged with Grand Cathay Securities in June 2013 and became the largest investment bank in Taiwan. China Development Financial (CDF) acquired KGI in 2012, merging it with its subsidiary Grand Cathay but the two operated separately for a while; the two separate entities were the strongest rivals of that year’s winner of the three awards Yuanta Securities. Therefore, it seems clear that the merger has totally changed the picture for the territory.
As a wholly owned subsidiary of CDF, the securities house held total assets of $5.4 billion and gained a ROE of 5.89%. It owned 91 branches in Taiwan and 26 branches overseas, as of December 30, 2013.
According to Dealogic data, KGI completed 43 DCM deals during the awards year and came first among Taiwanese brokerages in terms of size, which was $2.1 billion.
To break it down, KGI was the leading bank in terms of the volume of government bond trading and underwriting, the amount of principal guaranteed notes (PGN) issuance, as well as the outstanding amount of interest rate swaps and convertible bond asset swaps. It also ranked number one in corporate bond underwriting and secondary brokerage transactions.
KGI led a lot of deals, most were large transactions from local enterprises such as Taipower, Formosa Petrochemical, TSMC, Nan Ya Plastics and Far EasTone Telecommunications. It also performed outstandingly in the bank debenture primary market, leading several deals from such groups as Land Bank of Taiwan, Taiwan Cooperative Bank and Taiwan Business Bank.
In ECM, the firm outperformed its peers by arranging 59 deals of $1.8 billion. It led in all product segments including IPOs, follow-on offerings and convertible bonds.
Landmark transactions include the $110 million TWi Pharma IPO, the largest listing during the awards period, the $113 million follow-on by ASE Group with the tightest recorded discount in Taiwan since the 2008 financial crisis, as well as the $200 million CB by China Airlines, the largest since 2008.
Meanwhile, KGI ranked first in terms of advising on M&A deals, by deal number and deal size. It worked on ten deals this year, including FocalTech’s acquisition of Orise Technology, the first time a TWSE-listed foreign issuer has acquired a Taiwan-based company also listed on the TWSE.
KGI has been trying to expand into new asset classes and geographic areas. The firm is the first mover to propose ideas to deregulate on futures trading, such as loosening restrictions on participating overseas future markets. It was the first securities house to operate an offshore securities unit (OSU) platform.
BEST FOREIGN EXCHANGE BANK
Taipei Fubon Bank
Taipei Fubon Bank’s hard work has paid off in terms of profit increase in its foreign exchange business. By upgrading its market-making ability and further strengthening its options business, the bank was able to increase profits from these two businesses. The bank, with a focus on market making and franchise value, has seen FX options trading volume jump four-fold during the award period.
The bank is the most active Taiwanese bank in the Asia/G7 currencies broker markets with strength in both FX spot and FX derivatives.
Faced with its strongest rival CTBC Bank dominating the derivatives market, particularly in the G3 currencies, Fubon has ridden on Taiwan’s deregulation of renminbi business and the renminbi internationalisation story.
It has designed popular hedging and investment products denominated in the currency, which have led to double-digit growth in trading volume in the past two years.
To better control the pricing process and the risks during the process, the bank built a quantitative analysis team, the first bank in Taiwan to do so.
To further satisfy more diversified needs in the FX business, the bank launched another quantitative model to start the digital knock-out forward business in 2013 and again became the first and only bank to do so.
BEST FOREIGN INVESTMENT BANK
Morgan Stanley
The competition for this category has always been intense but Morgan Stanley this year wins the award because it held an evident edge over rivals in domestic ECM deals of Taiwan-listed companies as well as M&A advisory businesses.
The US investment bank managed to complete five deals during the award period, accounting for 6.1% of the market, the largest for a foreign bank. It acted as sole bookrunner on local bank E.Sun’s convertible bonds and on the three disposals of Ginko stake in Crimson Investment.
It did only one cross-border ECM deal this year but the primary GDR follow-on offering for Inotera Memories is the largest GDR offering by a Taiwanese technology company since January 2013.
What really tips the scale is the bank’s market leadership in M&A transactions. It beat rivals by acting as sole financial advisor on two deals of $1.4 billion, including the first ever bank acquisition in Japan by a foreign bank and the largest M&A deal in Japan by a Taiwan public company - the acquisition of Tokyo Star Bank by CTBC.
It has shown strong commitment to the Taiwan market as the only foreign investment bank to have multiple minority investments in the island for about $1.3 billion in total. It invested in CTCI Corp, Taiwan’s largest engineering, procurement and construction firm, as well as financial firms like E.Sun Bank and Chinatrust Financial.
BEST FOREIGN COMMERCIAL BANK
Citi
Citi’s position as the leading foreign bank in Taiwan hasn’t budged. Taking the island as one of its priority markets globally, the bank continues to develop in both institutional and retail business.
It serves more than 600 large corporate and multinationals, 2,600 small-and-medium enterprises and 4,000 retail SME, as well as 2 million credit card clients and 1 million retail customers.
For the financial year ended December 2013, Citi reported earnings before interest and tax (ebit) of $383 million, representing about half of the total ebit from five major foreign banks that acquired local banks in Taiwan. The ebit also leaves Citi the largest foreign bank by profitability in the market.
Citi continues to be Taiwanese companies’ preferred bank through leveraging its extensive global network, using tailor-made financial solutions with end-to-end services, as well as the comprehensive products it provides.
The bank showed solid business momentum by advising on three M&A transactions, closing five capital markets deals and completing four syndicated loans.
The US bank remains a key partner for local and international companies when it comes to cash management and trade finance. It supported a Taiwanese technology company to complete an inter-company loan to a subsidiary in the Kunshan Experimental Zone, which signified Citi’s capabilities in providing flexible financing solutions in light of China-Taiwan renminbi deregulation.
Consumer banking continues to lead the market through its wealth management banking services, value-added cards business and innovative mobile/digital banking services. The bank has about 4,500 employees across 64 branches on the island, and has launched up to 500 new products during the past year.
