Country Awards 2014 write-ups: Day 4

Why FinanceAsia editors chose the award-winners. Day 4 covers Bangladesh, Mongolia and Vietnam.


City Bank

Political unrest and subdued economic activity made life difficult for banks in Bangladesh during 2013. City Bank responded with sound management and succeeded in improving asset quality and liquidity, while cutting its cost of funds and maintaining adequate capital.

Unlike neighbouring India, Bangladesh has a thriving private commercial banking industry with plenty of competition. There are bigger players than City Bank, but none that offer a more complete range of banking products and services.

Its retail customer base expanded by more than 12%, while the credit card portfolio grew by 17% — helped by the launch of its American Express Platinum card. During the year it also launched internet banking, priority banking and launched a state-of-the-art passenger lounge at Dhaka airport. It has the biggest merchant base in the country and a network of 106 branches and 230 ATMs.

It is also a strong player in the corporate sector, including recent financing deals for the national airline, Biman, and BSRM Steel Mills.

In 2013 the bank took its first step overseas with the opening of a remittance subsidiary in Malaysia, which has been so successful that the bank is now in the process of opening similar operations in the US, Thailand and the Maldives.

City Bank’s profits grew 19% in 2013, which was slightly higher than the industry average thanks to strong but cautious asset growth. The bank extended loans and deposits at a slightly slower rate than its peers as part of a plan to maintain an 11% capital buffer.

Standard Chartered

Standard Chartered is easily the biggest and oldest foreign bank in Bangladesh, claiming a history that dates back 108 years. Indeed, it even claims to be the second-biggest taxpayer in the entire country and holds roughly half of all the foreign bank deposits and advances in the country, and it continues to grow.

During 2013, despite the tough market conditions, deposits rose by 9% and loans and advances were up 12%, helping revenue to grow 13% — more than any of its foreign competitors.

Much of the bank’s strength in Bangladesh is built on its large retail presence. There are 26 Standard Chartered branches and 22 kiosks throughout the country, and the bank says that it controls at least 17% of the retail revenue pool.

Its retail banking business is clearly unrivalled and provides considerable resilience to its overall franchise in Bangladesh, but HSBC is now a significant commercial banking competitor despite entering the market late and claims to be at least as profitable as Standard Chartered in wholesale banking.

However, we judge that the sheer size and permanence of Standard Chartered’s presence, combined with its large retail funding base, still gives it an overall edge.

Indeed, Standard Chartered is still a formidable competitor in the corporate and institutional space. The bank processed 6.5% of the county’s exports and 9% of its imports during 2013 and provides transaction banking to many of the leading multinational companies, local conglomerates and development organisations in Bangladesh.

Its emerging-market focus also plays well with the local garment industry, which is increasingly exploring opportunities in neighbouring countries as well as in the Middle East and Africa — all places where Standard Chartered remains committed.

HSBC has made good progress, but for now we still rate Standard Chartered as having the go-to franchise in Bangladesh.



Trade & Development Bank

TDB maintains its market-leading position in Mongolia. It has the best return on equity, the best return on assets and the lowest rate of bad loans among its peers. In 2013, TDB’s profits represented more than 40% of total banking industry earnings and it holds roughly a quarter of all loans and deposits.

It has not been a great year for business in Mongolia as so much of the country’s fortunes are tied up in the Oyu Tolgoi gold-copper project, which the government continues to hold up as it haggles with the project owners. Even so, TDB’s total assets grew 90% during 2013 and profits were up more than 85%, although momentum has slowed somewhat during the first quarter of 2014.

The quality of its lending book also remains strong. Bad loans have fallen to less than 1% in the first quarter of 2014, down from 1.4% in 2012 — and the bank’s capital buffer has risen to 15.6%.

TDB has also taken on the role of market development, becoming the first Mongolian issuer to sell an offshore renminbi bond, when it raised Rmb700 million in January 2014.

With such strong earnings, dominant market position and high quality asset base, TDB is once again a clear winner.




Judging banks is rarely easy, but it is particularly challenging in Vietnam. Having canvassed senior foreign and domestic bankers in the country, it seems that all anybody knows about the extent of banking sector losses is that they are far higher than declared.

Indeed, the situation is so bad that we chose to adopt some unusual judging criteria — such as giving credit to banks with high levels of bad loans and falling profits, using the assumption that recognising losses is better than pretending NPLs are 1%, as some banks continue to do.

Techcombank scores well using this metric, and is generally well regarded among foreign bankers in the country. Its bad loans are recognised on its balance sheet at 3.65% and profits were down more than 13% during 2013, which indicates a bank that is taking its medicine and putting its house in order. Rivals agreed that it seems to be on the right path.

The bank has sold $100 million of bad loans to the Vietnam Asset Management Company though some questions remain about its entrance into the consumer finance segment, where many banks have suffered big losses.

Saigon Securities

SSI helped its clients to raise roughly $250 million through IPOs, private placements and secondary offerings during the review period — a crucial service at a time when Vietnam’s banking sector is beset by bad loans and reluctant to extend credit.

Most of that money was raised through secondary offerings, as the market for IPOs has been subdued due to the tough market conditions. Even so, several companies sold stock for the first time. SSI helped Port of Haiphong to raise $11.4 million through an IPO in May 2014, as well as even smaller deals for construction firm Hancorp and building materials supplier Viglacera.

However, SSI made up for the weak IPO market with a strong performance on the securities services side of its business, thanks to another strong year in brokerage. The firm has nine branches across the country serving 60,000 domestic accounts and more than 400 foreign institutions. It was consistently the leading broker during the period under review with an average market share of 11.78% — and a 39% share among foreign clients.

SSI’s brokerage business also offers the biggest research platform, with 13 analysts covering 62 listed companies, which represent 92% of Vietnam’s total market capitalisation.

Although an active domestic investment banking market is still a long way off for Vietnam, SSI is clearly the country’s leading contender and has capabilities in a broad range of products and advisory services, including debt capital, M&A and restructuring.

VPBank Securities

VPBank’s securities arm has doubled its headcount since 2010 and continues to excel in debt capital markets work. It is a market maker, active trader and one of the founding participants in the government bond market.

The firm has relationships with a broad network of credible investors both in Vietnam and internationally, in-depth understanding of the domestic market and high-quality product structuring capabilities.

VPBS is the top ranked corporate bond arranger by the finance ministry and had a market share in 2013 of 38%, having advised on $700 million worth of corporate bond deals in Vietnam.

During the period under review it acted as a joint bookrunner on Vinacomin’s D5,000 billion private placement, the country’s biggest corporate bond deal to date. The deal followed on the heels of an earlier bond for Vinacomin but VPBS helped to achieve considerably better terms and pricing despite its bigger size.

The firm also acted as sole bookrunner on a D4,500 billion deal for its parent, VPBank, which was one of only four successful bond issuers in the banking industry.


Foreign exchange flows in Vietnam are dominated by the state-owned sector. SOEs contribute roughly one-third of the country’s economic output and are disproportionately involved in foreign exchange transactions, so it is not surprising that most of the flows go through public banks.

Vietcombank is the top participant according to central bank statistics. During 2013, the bank’s total FX dealing volume was $45 billion, up 7.1% against 2012. Its product range includes spot FX trading, as well as forwards, options, futures and swaps.

The bank has been involved in a strategic business alliance with Mizuho since January 2012, and this relationship has led to cooperation in FX trading as Vietcombank starts to provide services to Mizuho’s Japanese client base.

The bank has started the implementation of Basel II and is undergoing a large-scale IT project to centralise its trade finance operations and provide a more seamless service to clients.

Credit Suisse

Credit Suisse continues to dominate investment banking business in Vietnam. During the review period it completed transactions worth roughly $1 billion, despite difficult markets.

A big chunk of that came through Credit Suisse’s role as sole adviser to Vingroup in the sale of Vincom Centre A in Ho Chi Minh City for $468 million, which was the largest-ever real estate transaction in Vietnam. Given the challenging real estate market, Credit Suisse’s biggest challenge was to find high quality bidders with the ability to write a large equity cheque at premium valuation — a challenge it completed successfully.

Other deals for Vingroup included a $250 million international syndicated loan facility, a $200 million international bond and a $70 million treasury share placement.


HSBC describes itself as a mainstream bank in Vietnam, with a big enough presence to directly influence the development of the industry in a way that few other foreign banks can.

The bank’s onshore assets total roughly $3 billion and it generated revenues in 2013 of $230 million, across its 200,000 customers in global banking and markets, payments and cash management, trade and receivables finance, retail banking and wealth management.

The size of this footprint reflects HSBC’s strong call on Vietnam. It was the first foreign bank incorporated in the country and is clearly leveraged to the success of the economy — though this also means that it is exposed to the kind of domestic shocks that have affected the country recently.

Difficult market conditions led to industry-wide losses in the SME sector and HSBC was not spared the pain. Its bad loans rose to an alarming 3.3% by year-end despite its conservative approach, but it still managed to emerge as one of the most profitable banks in the entire Vietnamese industry.

Even so, HSBC has strong competitors among the foreign banks. ANZ has a similarly broad footprint, though it lacks HSBC’s stature in global banking. Citi has a strong presence in global banking, of course, but its commercial banking presence is relatively small and it is not embedded in the Vietnamese banking industry in the way that HSBC is.

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