celebrating excellence

FinanceAsia Country Awards 2020: why they won, part 5

The rationale for the winners in Taiwan, Thailand and Vietnam.
In May, we named the winners of our annual Country Awards. Today, we present the rationale for our decisions covering Taiwan, Thailand and Vietnam.
The competition was as fierce as ever and took place against an unprecedented global backdrop thanks to COVID-19. As we went through the pitches, what stood out was the firms' resilience and ability to adapt to fast-changing conditions. 
For the second year running, an editorial advisory board also aided the editors by providing a peer review across the region. So in addition to congratulating the winners, the editors would also like to thank the board members for their help and guidance on the banks, brokers, law firms and rating agencies that were shortlisted and selected. 
The members of the advisory board comprised: 
Terry Mahony - deputy chairman VinaCapital; former CIO emerging markets equities TCW and Indochina Capital, plus launch CIO of HSBC's GEM fund.
David Morton - advisor Helsinki Foundation Asia Pacific and chairman Yojee; former Asia Pacific head of corporate, financials and multinationals banking HSBC.
Susan Yuen - non-executive director Alliance Bank Malaysia; former regional CEO NBAD and CEO ANZ Hong Kong, plus head of corporate and institutional banking HSBC Malaysia and head of multinationals banking Maybank.
Sadly, due to the current global situation there will be no awards dinner this year. However, plaques are available and where possible, we would be more than happy to arrange individual ceremonies to present the awards.
You can find out more about our judging criteria for the domestic and international categories. 
This award is always CTBC Bank’s to lose and in 2019 it retained its crown for a number of reasons. 
Firstly, it is Taiwan’s most profitable private sector bank. In 2019, it reported record pre-tax profits of NT$38.46 billion ($1.26 billion), up 7.6% year-on-year. 
But perhaps most importantly of all, its businesses encapsulate where Taiwan Inc is going. And what became clear during 2019 is that corporate Taiwan is following its government’s policies and incentives to either come home or Go South. 
CTBC estimates that about 40% of its clients will have left China over the next two to three years, although the traffic is not entirely one way. Its China revenues continue to grow in the mid-single digits each year because a number of traditional industries such as furniture continue to set up on the Mainland to serve the domestic market there.
The influx back to Taiwan explains why the bank’s international business dropped from 38.1% to 35.4% of its total profits in 2019. Its local currency loan balance enjoyed double-digit loan growth. 
Electronics companies in particular have been bringing production lines back to Taiwan and the most cutting edge technology is likely to stay there. Others will either then move production to or look for supply chains in South East Asia, although in some cases they are also moving closer to end markets as TSMC is doing following the announcement of plans to set up a 5nm plant in the US. 
Unsurprisingly, CTBC’s South East Asian revenues grew strongly in 2019, up 14% on the year before.
CTBC has also been ploughing a lot of investment into digital transformation, which it estimates will take three to five years to complete. One big focus in 2019 and increasingly in 2020, is artificial intelligence (AI). 
During the fourth quarter of 2019, it embedded this in its mobile app through Chatbot services. It did a similar thing over at the private bank. 
Growth in private banking continues to motor along, as many banks are experiencing across Asia. AUM jumped by 13.7% to NT$67 billion ($2.26 billion) in 2019, with ultra high net worth up 26% to NT$22 billion ($740 million). This brought total AUM of NT530 billion ($17.89 billion).
The bank was especially delighted that it doubled AUM among its Private Privilege customers who have assets of more than NT$150 million ($4.8 million).
Many of these are first generation entrepreneurs grappling with the issue of succession planning. This trend also came through in the bank’s HNWI report, which it conducts every two years in association with PWC.
The report found that 55% are over 60 years old and 59% are business owners. The three things they care about most are how to maintain family wealth over multiple generations, preserve family harmony and family business education for the next generation. 
To serve them, CTBC provides family wealth governance services split into two categories: asset management and family governance.  
E.Sun came very close to winning the Best Bank award and there was never any doubt that it would win Best Sustainable Bank. The energy and momentum that has driven the overall bank over the past decade is very evident in its commitment to ESG.
It is far ahead of the pack, underlined by the fact that it became the first Taiwanese bank to sign up to the Equator Principles back in 2015. It not only wants to be Taiwan’s most profitable bank but also its most responsible.
In 2019, it committed to stop any further financing for the coal sector and had reduced its loan book to zero by the end of the year. 
By contrast, it is very active in the renewable energy sector. At the end of the year, it had cumulatively financed 572 solar power projects that had reduced carbon emissions by 65,000 metric tons. 
The extent of its green financing is impressive. At the end of the year, green loans amounted to 5.4% of its corporate loan book, equivalent to NT$38.5 billion ($2.57 billion). 
Just over 15% of its bond issuance also has a green hue. Last year, one stand out transaction was the $120 million green bond it led for Credit Agricole, which became the first foreign financial institution to tap Taiwan’s bond market. 
E.Sun is also very good at getting its customers to become more involved in its ESG initiatives. Its most famous programme is the Golden Seed project, which it launched back in 2008. 
Every transaction on its VIP credit card attracts a 0.3% fee, which funds the foundation. This has led to the construction of 150 libraries in rural areas, benefitting 90,000 children. 
Yuanta is the regional securities house to watch over the coming decade. For years it has had a very strong presence in Taiwan where its capital markets and brokerage operations perfectly complement each other.
It is now using its considerable knowledge of the tech sector and global supply chains in particular as a research bridgehead into other markets. These include South Korea and increasingly Asean, a part of the world the Taiwanese government is keen to exposure more of the country’s economy too.
It says everything about those ambitions that Yuanta also won FinanceAsia’s debut award for Best Investment Bank in Cambodia this year.
Yuanta also has offices in Indonesia, Thailand and more recently Vietnam. Once the world regains some stability from the COVID-19 pandemic, it plans to start integrating its regional platform more fully and rolling out its Mr Yuanta retail trading platform across the region. It has also partnered up with Deloitte and PricewaterhouseCoopers (PwC) to explore business opportunities across South East Asia. 
Yuanta’s digital strategy has gone from strength to strength over the past year on the back of Mr Yuanta’s popularity. Since its launch in September 2018, the brokerage app has built up a 600,000 strong active user base and gone through a number of iterations to improve the customer experience.
This year, it plans to target its high net worth customers by allowing them to modify the platform themselves to create unique trading strategies. All of this activity has helped Yuanta to increase its market share.  
At the end of 2019, its brokerage market share has risen from 11.88% to 12.24%, cementing its status in the number one spot. Its share of stock lending also jumped from 21.64% to 22.13% and warrants issuance from 22.19% to 23.13%.
The securities firm's determination to showcase its talents on the global stage has been further underpinned by the business its capital markets team has won. The group executed its first G3 currency convertible in 2018. Then in 2019, it built on this to execute a string of new deals in association with its Hong Kong securities business.
Together, the two underwrote a $100 million convertible and $80 million global depositary receipt (GDR) for BizLink Holding, which provides battery management system harness for Tesla and a $129 million GDR for China Petrochemical Development Corp. 
In total, Yuanta underwrote NT$17.6 billion ($587.3 billion) of the country’s total NT83.26 billion ($2.78 billion) equity deals during 2019, giving it a leading 21% market share. In terms of number of deals, it was on 46 out of the 183 executed.
It led seven IPOs including Pegavision, which raised NT$1.6 billion ($53.4 million). This ranked as Taiwan’s second largest flotation of the year: its small size underlining the necessity of developing new overseas business lines to create a flourishing business over the long-term. 
There was more local activity in the secondary placements. Here Yuanta was sole lead of the country’s largest equity deal of 2019 - an NT$21.2 billion ($708 million) follow-on offering for one of its longest standing clients, Cathay Financial Holding Co. 
In addition to an extremely strong ECM franchise, Yuanta also has a number of M&A deals under its belt. In 2019, it advised Glac Biotech on its $89.84 million privatization and ASMedia Technology on a share swap deal with WT Microelectronics.
It also has a flourishing DCM business. It dominates the NT$ bond market in terms of deal flow, but does not yet have quite the same standing in the Formosa or offshore bond market as competitors like KGI, Cathay and E.Sun. 
However, yet again its ability to read the market means it is often happy to sole underwrite deals such as Taiwan High Speed Rail’s unusual NT8 billion ($267 million) bond deal, which stood out because of its 30-year tenor. 
This was one of the trickier awards that FinanceAsia had to judge, just like last year. It is always highly contested and each of the main houses has their individual strengths.
Yuanta Securities is a powerhouse in NT$ bonds, while Cathay United Bank has made impressive inroads with international issuers. The latter came close to clinching the award because of its ESG track record, which included a $680 million Formosa by CIMB Bank that represented the first bond from South East Asia tied to the UN’s Social Development Goals (SDGs).
Cathay was also a lead manager on an $850 million Formosa for Maybank, which marked the largest Asia ex-Japan Formosa of 2019. Its co-bookrunner was KGI Securities. 
At the end of the day, KGI won because it is either top or second in every single category that FinanceAsia looks at among the Taiwanese houses: NT$ bonds, Formosas and G3 bonds. 
It does not have the balance sheet that some of its competitors enjoy, which means that it needs to stay on its toes by continually innovating and maximising its distribution network. It does both well.
KGI is also unafraid to sole-underwrite large deals, bucking the trend for the sizeable syndicates attached to most Taiwanese bond deals. One standout transaction in this respect was Taiwan Mobile’s NT20 billion ($670million) triple-tranche bond, issued this January. 
The domestic Taiwanese bond market was particularly active during 2019 as companies relocated from China and boosted their capex spending to expand production back home. Fortunately funding costs remained low as the local market remains flush with liquidity.
This also aided Credit Agricole, which tapped the market for NT$2 billion ($67.8 million) to fund its renewable energy projects. KGI was lead manager for the French bank’s debut domestic bond offering. 
It also has plenty of repeat business, mostly notably from Bank of Nova Scotia, which tapped the Formosa bond market eight times during 2019. KGI was the lead every single time. 
Citi’s Taiwan business is in rude health. For the financial year ending 2019, the bank reported EBT of $482 billion, a 13% jump on the year before and its highest since 2013.
Despite not being a domestic player, Citi has a decent presence in the country, operating 47 branches and having around 4000 employees looking after retail and corporate clients. 
The bank continues to push out new services in the retail and high net worth segment. Last year, it launched the Total Wealth Advisor tool, an advanced service that allow customers and their wealth managers sets investment targets and goals. 
The Citibank Global Wallet was also rolled out last year too. This is a service that allows people to spend overseas while effectively operating in the local currency. 
In what was a relatively quiet year for Taiwan’s capital markets, Citi worked on a handful of very credible deals, notably in M&A and structured loans. Where the latter is concerned, Citi was the sole provider of a $1.1 billion bridge loan to help Yageo Corp finance the acquisition of KEMET Corporation – a transaction, which prompted the corporate’s chief operating officer to say this:
“Citi’s experienced team in both the US and Taiwan worked collectively to navigate through numerous critical issues during the negotiation process… we highly regard Citi’s M&A capabilities and look forward to further developing our long-term relationship with Citi in the future.
This award was a very close call between Goldman and Citi. Indeed, the two banks are on either side of the $1.8 billion sale of US electronics components manufacturer KEMET Corp to Yageo Corp, which was announced last November.
But it was Goldman, which topped Dealogic’s M&A league tables for announced and closed deals during the period. And M&A was where the action was at for the international banks active in Taiwan last year. 
Goldman has enjoyed very close relationships with Taiwan Inc’s top blue chips for many years and this has always enabled it to stay ahead of the main trends. In 2019, there were two clear strategic impulses.
Firstly, geo-politics means that many Taiwanese companies are re-locating from China and re-thinking their supply chains. Secondly, cheap domestic liquidity is giving them the firepower and confidence to move forwards.
There have, therefore, been numerous instances of Taiwanese companies making overseas acquisitions and private equity companies looking for good assets in Taiwan.
One example of the former is the $250 million acquisition of Panasonic’s semiconductor business by Nuvoton Technology. GS advised Winbond spin-off Nuvoton on the cross-border deal, which is far larger than it appears because of the debt involved.
A good example of the latter is the $350 million sale of Gong cha Group to US private equity group TA Associates. Goldman advised the founders of the bubble and milk tea brand over the sale. 
BEST BANK: Siam Commercial Bank
It is still Thailand’s most profitable bank despite a three-year transformation programme that has considerably increased costs over the short-term.  
Siam Commercial Bank (SCB) saw net profit rise 0.9% during the 2019 Financial Year to Bt40.4 billion ($1.3 billion). This means that it just pipped Kasikornbank, which recorded net profit of Bt38.7 billion ($1.23 billion) over the same period.
SCB has been Going Upside Down, as it terms it, for three years at a cost of Bt40 billion. The idea is to shut down large swathes of its branch network and embed digitization across the bank. 
It closed 61 branches in 2019 to bring the total down to 958 and has plans to close a further 100 during 2020. 
So far, this has not had the desired effect on the bank’s cost-to-income ratio, which rose from 46.77% in 2018 to 49.68% in 2019 according to S&P Global Market Intelligence data. However, it is expected to decline from here. 
It has been more successful in its strategy of boosting unsecured lending. This rose from 5% to 7% of its total loan book in 2019. Retail as a whole was up from 45% to 48%. 
One key step has been the formation of SCB 10X, which has a Bt20 billion three-year budget and a mission to oversee all the technology companies in the SCB group such as SCB Abacus (data analytics) and Digital Ventures (fintech and venture capital).
When it comes to everyday cash, SCB has also made it easier for customers to make transactions outside regular banking hours, by allowing them to make deposits and withdrawals using QR codes at over 12,500 7-Eleven shops nationwide. 
Bank of Ayudhya, also known as Krungsri, is one of Asia’s most interesting and innovative banks. In a Thai context, it has always been at the forefront of ESG development and was the indisputable winner of FinanceAsia’s first sustainable bank award. 
One of its ESG mandates is to make sure that it is aligned with those of its strategic shareholder, MUFG. The two also worked together on the region’s debut private sector gender bond, issued last autumn.
This pioneering $200 million Women Entrepreneurs Bond was placed with the IFC and Deutsche Investitions und Entwicklungsgesellschaft (DEG). Proceeds are being used to boost lending to women-led SMEs in Thailand, backed by Bank of Ayudhya’s Women Bond Framework. 
Promoting and boosting gender equality across the workplace is one of the areas that Bank of Ayudhya has made a real mark. And that includes the bank itself where four of the 12 board directors are female. 
In doing so, it is adhering to one of the UN’s SDGs. The intergovernmental agency’s 17 goals form the core pillars of Bank of Ayudhya’s strategy too.
To promote greater financial inclusion, Bank of Ayudhya has become Thailand’s largest commercial banking entity in the microfinance sector. A couple of years ago, it purchased a similar operation in Cambodia, which it hopes to use as a springboard to upgrade to full banking status. 
Microfinance accounts for 5% of the bank’s overall loan book, with SME lending taking up a further 15% chunk. 
At the end of 2019, green finance accounted for about 2%. But this is an area the bank is keen to ramp up over the next few years and anticipates a tripling of loan volumes over that time. 
As of 2019, it had lent Bt12.06 billion ($380 million) to renewable energy projects, for example. By type these had a split of water 51.58%, biogas 23.28%, wind 15.19%, waste 6.21%, biomass 2.51% and solar 1.23%. 
This is always one of the most difficult awards that FinanceAsia has to judge. The reality is that Thailand has a cluster of equally good ECM houses.
Nothing underlines this more clearly than the fact that all three of the leading players - Bualuang, Kasikorn and Phatra – were on the two largest and most significant IPOs of the year for Asset World Corp and Central Retail Corp, which respectively raised Bt48 billion ($1.36 billion) and Bt78.12 billion ($2.29 billion). 
What tipped the award in Kasikorn Securities' favour was the third largest IPO. It was the only one of the three houses manning the syndicate for Bangkok Commercial Asset Management Company, which raised Bt30.89 billion ($1.02 billion) in December. 
This deal represented the largest-ever financial institution IPO from South East Asia and was Thailand’s largest corporate privatization since 2012. The deal was a resounding success particularly among Thai retail buyers: an investor segment that Kasikorn’s distribution network was able to maximise.  
The investment bank also brought in all 12 of the cornerstone investors that took 46% of the offering pre-greenshoe. 
As a result, the deal also traded up in the secondary market and continued to hold its own above issue price throughout the COVID-19 volatility that battered global stock markets during the spring. 
Overall, Kasikorn had a very strong year on the ECM side, leading five flotations and was a very worthy winner of the award. It was also a bookrunner on a Bt4.065 billion ($118 million) offering for construction materials company, Domhomes, and a Bt1.72 billion ($57 million) deal for R&B Food Supply Company. Both deals have consistently traded up in the secondary market.
When it came to M&A, the Thai banks had a fairly quiet year compared to their foreign counterparts. However, Kasikorn was busy, acting as one of the advisors for the management buyout of electronics manufacturing services company SVI Public.
Kasikorn’s main role was as tender agent on the Bt2.8 billion ($92.86 million) deal.
The Thai bank has consistently won this award and 2019 was no different. Indeed, it cemented its hold at the top of the domestic league tables and made a showing in the international ones too thanks to a $360 million G3 bond offering for debt collection company, JMT Network Services.
According to Dealogic data, KASIKORNBANK topped the domestic bond league tables with a 15.15% market share during the awards period. It participated on 67 deals with accreditation for $3.85 billion of the amount raised. 
Its expertise means that it spans a wide array of issuance types from plain vanilla, partial and fully-guaranteed structures, REIT bonds, Tier 2 capital, non-rated and hybrid bonds. 
Examples of its capabilities were demonstrated by a number of standout deals. 
In July 2019, it was one of the lead managers for a Bt1.5 billion offering for Risland Thailand. This three-year, double-A rated deal marked the first non-financial and Chinese-related issuer to tap the Thai baht market. 
Its parent, Country Garden Holdings, is extremely well-known in the international bond markets, but not in Thailand. The deal was a challenge to execute and ended up with a high coupon compared to local comparables. But it got done and created a new benchmark. 
Another landmark was Energy Absolute’s Bt10 billion bond offerings, which were split into three separate deals. The renewable energy company was able to take the development of Thailand’s green bond market one stage further.
Its deals were the first to combine standard institutional investors (more than 30 investors comprising mutual funds, banks, securities houses, cooperatives, life and non-life insurance companies), high net worth investors and a supranational (in this case the ADB) under the same commercial terms.
Proceeds will be used to refinance a 260MW wind farm project. 
BEST BROKER: Phatra Securities
This is the fifth time running that Phatra has won this award and while it faces growing competition from some of South East Asia’s fast expanding regional brokerages, it still retails the top spot. 
It is the number one broker in Thailand in terms of overall volumes and has a leading 17.4% market share with local investors and 7.6% market share with foreign investors. 
In terms of volume, foreign investors are most important to it, accounting for 82% of its flow during the awards period, followed by domestic institutions on 10% and retail 8%. However, this is reversed when it comes to commission income, with domestic institutions accounting for 38%, retail 31% and foreign institutions 30%.
One of the keys to its success is Phatra Edge, which services clients with Bt2 million ($62,700) to Bt30 million ($940,000). This segment witnessed continuing strong growth from 2018 to 2019.
Client numbers rose 10.68% from 8,000 to 8,854 while AUM leapt 26.4% from Bt38.33 billion ($1.2 billion) to Bt48.47 billion ($1.52 billion). Overall AUM for the high net worth sector rose 17.9% from Bt435 billion ($13.63 billion) to Bt500 billion ($15.67 billion).
Phatra prides itself on the wide variety of products it offers and in 2019 it launched direct offshore investment for wealth management clients spanning stocks, mutual funds and structured notes. In total, it offers 43 funds locally and 254 globally.
As the competition heads up at home, Phatra is also making further inroads overseas and has set up a dedicated CLMV (Cambodia, Laos, Myanmar and Vietnam) team to help its push into markets that are likely to flourish over the coming decade.
Last autumn, it also unveiled PhatraX, a digital research and database library for clients. Its longstanding partnership with BofA Securities also provides a pillar of strength through co-branded research. 
This side of the business remains as strong ever with the brokerage covering 90 stocks and 16 sectors that account for just over 70% of the Stock Exchange of Thailand’s (SET) market cap. 
BEST PRIVATE BANK: KBank Private Banking
COVID-19 is altering many things across the financial markets and KBank Private Banking remains right at the forefront of driving those changes in Thailand. Once again, this innovation and flexibility makes it the deserving winner of the award.
Clients are adopting a different focus in terms of the investments they want and how they transact them. 
Bankers say that it is noticeable how much more proactive clients have recently become when it comes to ESG. Where previously the focus was more on returns than sustainability, the virus has forged a better understanding of how the two can be aligned. 
Last year, for example, the bank launched its first ESG fund through Baillie Gifford. After a slow start, interest picked up once private banking clients noted how a lack of correlation to mainstream markets meant the fund was outperforming as COVID-19 took hold across the world. 
KBank now hopes to build on this by launching a new sustainable fund in the third quarter via its tie-up with Lombard Odier. This is currently being tweaked to align the Swiss product to Thai clients’ interests.
The bank has even changed its underlying philosophy. The tagline remains Wealth with Happiness, but happiness is no longer defined as “Comprehensive Wealth Management,” but the “3S’s – Sustainability, Sharing and S-Curve” (the S-curve being a focus on optimising clients’ business growth, which should also benefit KBank’s AUM).
The Lombard Odier partnership also enabled KBank to launch an Asian Bond Fund and add a third risk-based allocation fund to its core portfolio during 2019. Last year, also saw it become the first Thai bank to launch a private equity fund. 
The aim is to continue diversifying clients’ assets and focus on maximising returns rather than simply growing AUM. A good testament to the success of this strategy has been a boost in the investment to deposits ratio from 60/40 in 2018 to 70/30 at the end of 2019. 
In terms of digitisation, the bank saw a 20% increase in clients asking for telephone or online banking during the spring when the latter were unable to get to branches. Next in line is the launch of a mobile app. This was originally scheduled for the first quarter of 2021.
BEST LAW FIRM: Weerawong, Chinnavat & Partners
It has been another exceptional year for Weerawong C&P, an extremely worthy winner of this award. The law firm stands head and shoulders above the competition, largely because it has strength across the board. 
It is the domestic law firm that captures most of the benchmark capital markets transactions and has been assisting the government to get its major infrastructure projects off the ground. For the past couple of years, it has been advising the government on updating its public private partnership (PPP) laws and in particular setting up the legal framework for the country’s Eastern Economic Corridor (EEC).
Two of the EEC’s mega projects were awarded last year. The first is the Bt220 billion ($7.2 billion) high-speed rail project linking Suvarnabhumi, Don Mueang and U-Tapao airports.
Weerawong C&P led the negotiations and then the drafting of the concession agreement with the private sector contractors. And perhaps more importantly, it has now won the mandate to monitor the management of the concession agreement.
It is likely to play a similar role with the second EEC project it has been working on: the Bt55.4 billion ($1.8 billion) Map Ta Phut Port Project. The contract for phase three was won late last year by Gulf MTP, a joint venture between Gulf Energy and PTT Tank Terminal. 
In the capital markets, there were two notably large IPOs for Asset World Corp, a member of the TCC Group and Central Retail Corp owned by the Central Group. Weerawong C&P was the legal advisor for the former’s Bt48 billion ($1.36 billion) flotation. But it also helped to pave the way for the latter thanks to its work handling conflicts of interest with Thailand’s Securities & Exchange Commission.
This was necessitated by the fact that both groups have multiple real estate assets across different listed vehicles. The law firm devised a framework that smoothed out conflicts of interest by establishing first right of refusal and right to make the first offer among other issues. 
Citi has a much bigger franchise than its nearest competitors in Thailand, in part because it is the only one with a consumer banking franchise.
What helped it to win the award this year was the fact that it was able to leverage all of its business lines to record higher growth. Assets were up 7.4% during the 2019 Financial Year to $7.8 billion, while revenues rose 11.7% to $617 million and net profit was up 8.7% to $200 million.
This strong momentum meant the bank was also able to improve a number of key efficiency ratios. ROA rose from 2.5% to 2.6%, while its cost-to-income ratio dropped from 38.4% to 46.7%. The only slight impairment was ROE, which fell from 16.3% to 15.9% because of capital conversion. 
In the main it was a solid year of winning new mandates from existing clients.  
The packaging arm of Siam Cement group made Citi the escrow account holder for its acquisition of Indonesian paper packaging company PT Fajar Surya. Then there was Olam Thailand, which expanded its supplier-financing programme with Citi.
New mandates came from the likes of Safety Insurance, a non-lifer, which mandated the US bank to support end-to-end cash management services. 
On the consumer banking side, Citi is a market leader in credit cards and added to the roster in 2019 with a new co-branded credit card with Mercedes Benz.
This was one of those years when a different bank topped each of the three main investment banking product lines. The one that was closest to the top in all three categories was Morgan Stanley.
This stands testament to its consistency in Thailand where it has had a strong franchise for many years. 
Nothing highlights this more than its relationship with Bangkok Bank. There is rarely a year when the US bank is not doing a deal for the Thai bank and 2019 was no exception. 
In September 2019, it was lead left global co-ordinator for a $1.2 billion Tier 2 bond deal. This marked its fifth consecutive time leading a bond deal for the Thai bank.
It also advised the bank on its $3 billion acquisition of Indonesia’s Permata Bank. This represented the first-ever outbound bank M&A from Thailand, closing in December. 
In fact, Morgan Stanley was extremely active in the bank M&A scene over the course of the year. It advised TMB on its $7 billion merger with Thanachart, which closed in August 2019 and Siam Commercial Bank on the $3 billion formation of a bancassurance partnership with FWD Insurance.
However, what really swung the award in Morgan Stanley’s favour was its role in the two largest IPO’s of the year for Central Retail Corp and Asset World Corp, which respectively raised Bt78.12 billion ($2.29 billion) and Bt48 billion ($1.36 billion). They were also represented Thailand’s largest-ever IPO and second largest corporate IPO. 
The bank’s ECM franchise was rounded out by a clutch of other transactions including the largest block of the year: a Bt15.56 billion ($507 million) divestment in telecommunications holding company, Intouch, by Temasek. 
BEST BANK: Techcombank
This is a hard award to judge because it pits Vietnam’s state-owned behemoth, Vietcombank against its smaller but nimbler private sector competitor, Techcombank. 
Both institutions have their strengths, but this year we decided that Techcombank’s superior efficiency and profitability ratios won the day. Techcombank may be one-third the size of Vietcombank in terms of assets, but in 2019 it generated 55% of its rival’s profits. 
This means that nearly all of its metrics are superior. According to S&P Global Market Intelligence data, Techcombank recorded an ROAA of 2.91% in 2019, up from 2.87% in 2018. Vietcombank came in at 1.65%.
Its NIM was also more than 100bp higher than Vietcombank at 4.28% in 2019 compared to 4.10% in 2018. Its cost-to-income ratio was 36.54% compared to Vietcombank’s 37.14%. 
Techcombank’s overall capital ratio improved from 14.3% in 2018 to 15.5% in 2019: nearly double the State Bank of Vietnam’s guidelines. This strength is also underpinned by a leading CASA ratio of 34.5% at the end of 2019. 
Other private sector banks have tried to match its CASA strategy by reducing or waiving transaction fees. But Techcombank benefits from its first mover advantage and is particularly adept at not only keeping customers sticky but also using its data analytics to cross-sell and up-sell.
It has been particularly good at maintaining strong corporate relationships with Vietnam’s most active private sector groups such as Vingroup and Masan. Its retail franchise has also been very targeted towards the mass-affluent sector, helping it to adroitly ride the rapid rise of middle class wealth across the country.
In 2019, it recorded a 60% rise in its mortgage loan book. This is a sector, which is only just starting to take off. In 2019, 735,000 couples got in a country where there are only 200,000 outstanding mortgages. 
It is a strong product line for Techcombank, accounting for 81% of its retail loan portfolio in FY2019, up from 74% the year before.
The bank is also witnessing strong growth in credit card wallet share. It ranks first with Visa, enjoying a 30% share in debit cards and 20% in credit cards.
And finally there is digital where it has always had an edge over its peers. As a result the National Payment Corporation of Vietnam ranked it first for mobile banking volumes in 2019 with 33% of all transactions.
Techcombank has just come to the end of one five-year plan. Its next one is likely to continue along a similar vein: low risk, high returns and keep innovating and pushing its targeted sectors. 
After a few years marked by one sizeable equity deal after another, 2019 was a dismal one for Vietnam. There were virtually no ECM deals above $100 million. 
The HOSE Index was range-bound for most of the year, with prospective issuers sitting on the sidelines hoping the market would re-bound to its 2018 highs again. Instead they got COVID-19 and a dramatic sell-off, which had not completely reversed itself when the awards were judged. 
However, through it all there has been one domestic investment bank putting buyers and sellers together, mainly through private placements. Viet Capital was more active than all of its counterparts. 
During the awards period, Viet Capital’s largest deal was a $153 million private placement in Minh Phu Seafood Corp. A subsidiary of Mitsui & Co took up the stake, which represented 35.1% of the company’s outstanding equity post issuance. 
It sold a similarly sized stake in Duong River Surface Water Plant, which raised $89 million after divesting 34% of its equity to Thailand’s WHA Utilities & Power. 
In the pre-IPO sector, Viet Capital helped POPS Worldwide to raise $30 million for its Series C capital raising. The investors were Mirae Asset-Naver Growth Fund and Eastbridge Partners. 
Kaizen Private Equity also purchased a minority block in Yola Education for $10 million under Viet Capital’s guidance. The education group was able to negotiate a final price that was 35% higher than the initial offer it received. 
Viet Capital’s final deal was the same size and took the former of a convertible bond into Dat Xanh Group. The buyer was South Korea’s Asset Management, which can convert after one year at a 25% premium to the stock’s close in April 2019. 
BEST DCM HOUSE: Techcom Securities
This award makes it a hat trick for Techcom Securities, which has done more than any other player to develop Vietnam’s domestic bond market. It is now facing more and more competition, particularly from VPS Securities, which had a very good year, but it nevertheless retains its crown for another year because of its pioneering status. 
The domestic bond market has come on in leaps and bounds in recent years. In 2019, corporate bonds soared from 8.6% to 11% of GDP. 
Techcom Securities enjoyed a 32% market share, raising a total of VND61 trillion ($2.62 billion) for its clients. 
It has a very strong lock on the country’s best-known corporates including Vingroup and Masan. In part, this can be attributed to its parent bank’s relationships and also to the latter’s strong appetite for bond paper for its own investment purposes (for most of the year anyway). 
One thing that distinguishes the Vietnamese bond market from other regional ones is the large flow of private placements to a handful of core investors. This is because the regulator has been clamping down on distribution to retail investors unless bonds are listed to ensure greater transparency.
This had the knock-on effect of driving out retail demand since very few corporates have been willing to go through the bureaucracy involved in preparing a public deal. One of the few exceptions is Masan Group, which executed a public deal in 2019 via Techcom Securities. 
It proved why it pays to do so since the consumer group was able to issue in size - VND6.5 trillion ($278 million) - and attract hundreds of investors rather than the half dozen or less attached to most private placements. 
Techcom Securities says that there has been a notable uptick in the number of institutions entering the domestic bond market, which bodes well for the future. It counts about 50 active accounts, which are also helping to drive better secondary market liquidity too.  
It is hard to compete with SSI in Vietnam because the brokerage has such a strong hold over the retail investors that still dominate the market. It is the retail broker par excellence with a consistent number 1 ranking on the Ho Chi Minh Stock Exchange.
In 2019, it derived 90.72% of its revenues from retail clients and the remaining 9.29% from institutions. This translates as VND1.13 trillion ($48.4 million) in revenues from the former and VND115 billion ($5 million) from the latter. 
SSI is, however, busy building up its institutional business and now has 1,600 clients. It aims to open about 200 new accounts per year and has noticed strong interest from the US over the past couple of years, on top of existing demand from Japan, South Korea and Thailand, which are all big investors in Vietnam. 
The broker currently has 14 research analysts covering 70 stocks, which encompass about 80% of the overall market capitalization. It particularly prides itself on taking more “realistic” views on stock valuations.
This typically means more sell recommendations. And indeed, at the time FinanceAsia was conducting the awards process it had about 50% sell recommendations, 15% neutral and 35% buy recommendations. 
It has also understood the importance of guiding its clients through the impact of COVID-19 on the local stock market. Throughout April, it held 12 online conferences with different companies. Each attracted up to 100 investors. 
A new year and a new CEO for HSBC in Vietnam after its longstanding head, Pham Hai Hong, took up an international job elsewhere in the bank. But the transition to a new CEO, Tim Evans, did not make any difference to the bank’s ongoing dominance of the foreign banking scene in the country. 
This is likely to become even more noticeable in future years. Vietnam has been identified as one of the key countries in HSBC’s pivot back towards Asia. 
This is already being demonstrated in strong asset growth. During the 2019 Financial Year, assets rose 24% to VND125.16 trillion ($5.36 billion).
The investment HSBC is pouring into the country means that its cost-to-income ratio did rise from 39% to 42% from 2018 to 2019. However, the bank has managed to keep its other metrics fairly stable with ROE coming in at a very enviable 19% and ROA at 3%. 
HSBC has a leading market share across many sectors: from credit cards to custody. It is particularly keen to bank the country’s increasingly affluent and numerous middle class population and is currently preparing to re-launch its Premier retail offering. 
It believes the opportunity in this sub-sector is substantial and hopes to keep Premier clients on board as their wealth grows and they are able to upgrade to Jade and then its private banking offering. 
On the wholesale business side, digitisation is the order of the day. 
In October, the bank launched its Omni Channel Collection solution. This enables corporate clients to offer multiple non-cash payment options to their customers on a single platform. 
Last year, HSBC also executed the first pilot blockchain letter of credit between a Vietnamese and South Korean client.
And finally, there is the ever-present prospect that Vietnamese issuers may soon venture into the global bond markets. 
The bank led the sovereign on a non-deal roadshow. But the standout deal was Mong Duong’s pioneering project bond, which raised $679 million last July. 
It is rare that one investment bank dominates a market as thoroughly as Credit Suisse does in Vietnam. It is even more rare to see it happen in a country, which offers the potential that Vietnam does. 
The Swiss bank’s relationships with the country’s clutch of dominant private sector companies means that it is on nearly every single deal for the likes of Vingroup and Masan. During the awards period, it raised a total of $3.4 billion for entities in the country.
Unsurprisingly, its largest transaction was for the ever-expansive Vingroup. In May 2019, it brokered a VND23.3 trillion ($1 billion) strategic investment into Vingroup by South Korea’s SK Group. This represented Vietnam’s largest-ever public M&A transaction. 
Other Vingroup transactions included another strategic investment: this time, a $500 million purchase of VinCommerce shares by a GIC-led consortium. 
Credit Suisse also tends to be the lead manager when investors want to sell out of Vingroup. In May 2019, it led a $147 million block held by Warburg Pincus. 
Other clients included Vietcombank. In November last year, Credit Suisse was the advisor on a $400 million bancassurance partnership with FWD Group and the sale of Vietcombank’s stake in its life insurance joint venture to the Hong Kong insurance group. 
Another repeat client is No Va Land. In 2019, Credit Suisse was the original mandated lead arranger and bookrunner for a $250 million senior secured term loan. 


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