HSBC has always been a bank that likes to look forward and, even in these challenging times, its Asian syndicated loans team, headed by Avi Bindra, is looking at ways to build on its already large and active presence in the region.
The bank scores highly in league tables in many countries and is currently ranked number two in Asia in terms of deals done so far in 2001, according to league tables for the first three quarters from Thomson Financial.
"We are focusing on increasing our activities across the region," says Bindra. "We have a strong presence in most Asian markets with a client base that covers the full spectrum from top tier to middle market borrowers. Our goal is to step up activity in both these segments both onshore and offshore."
Widely acknowledged as the one of the biggest players in the syndications business in the Greater China market, HSBC has ambitions to match that status in other Asian markets as well. But, as Paul Tay, director, explains, the bank will not be taking ill-considered shortcuts to reach its goals.
"We want to step up our activity all across Asia, not only in Greater China," says Tay. "Having said that, we are not going to commit our balance sheet imprudently just to move up league tables. That is important because it demonstrates that we are committed and will continue to help quality clients with their funding requirements."
Those clients include the likes of Hong Kong's Hutchinson Whampoa, who HSBC helped to raise a huge HK$12 billion and a new benchmark for the market in May. Or Reliance Petroleum from India, who in April launched the biggest ever Indian syndicated loans offering for US$500 million.
A recent S$390 million refinancing in September for Bugis City Holdings in Singapore was lead managed by the bank despite fierce price competition from local and international banks. In a difficult market, the combination of HSBC's presence in the local market and the sound structure of the transaction ensured a positive response from investors and ended up being two times oversubscribed.
HSBC gets its competitive edge from an unwavering commitment to client needs and although it is very much a global bank with huge commercial power, HSBC acts very much like a local bank in each country it is active in. This is unsurprising: HSBC has been an active player in Asia for almost 150 years, making it probably the oldest bank in the region. This helps the bank to understand local markets and therefore the needs of local clients whether it is for onshore or offshore financing.
"We work hard to identify opportunities in each market, which is a process of building s local presence, gaining local knowledge and contacts which is what helps us to get the deals," explains Rakesh Bhatia, director with special focus on South Asian syndication. "The combination of our local presence, a 100% commitment to the product and the wealth of experience are all ingredients in our success. We are also in a position where the investment banking side of HSBC is supported by the full power of the commercial bank."
"To keep ahead of the competition, we always look at our position in a number of areas: client relationships, underwriting, retention, structuring and issuing capacity," says Tay. "As far as Greater China is concerned, we score top marks in all areas. We are one the largest banks in Hong Kong and we have a history of retaining top professionals. We want the same success throughout Asia."
The regional offshore syndications are run out of two offices. Hong Kong is responsible for Greater China and North Asia activity while the Singapore office covers the rest of Asia. Both teams work closely together as the team expands its reach in the region.
"We are stepping up our efforts in markets such as Australia, Japan, Malaysia, South Korea, Taiwan, Thailand and the Philippines and are focusing on building up client relationships," says Eleanor Li, director. "In addition to the teams based in Hong Kong and Singapore, we have people on the ground in most countries who help originate offshore deals and who are also responsible for executing onshore/local currency syndications."
"The regional offshore syndication team will continue to be centered in Hong Kong and Singapore because these are the two main financial centers at this time," asserts Tay. "Our business is a function of the market. If the major location for the syndications business shifted to Shanghai: rest assured we would move people into China. At the moment we have sufficient capacity in the region to deliver what our clients need and the flexibility to move resources around to where they are needed."
Commitment, service and flexibility are all drivers in getting HSBC mandates throughout Asia. The syndications team will not shortchange its large network of institutional investors across the region by doing deals for borrowers whose credit quality does not stand up.
"We will not do a deal just for the sake of it," says Tay. "The credit has to stack up and the transaction has to make sense. Over the years, liquidity in the market has increased and spreads have come down but that does not mean the credit quality has increased. The economy is still not as vibrant as it was pre-1997, so although there may have been a shortage of supply for quality credits and, unlike some of our competitors, we do not kid ourselves that covenants should be relaxed."
Rather than scale-back its operations, the syndications team is extending its reach further in its efforts to bring high-quality loan offerings to Asian investors. "These are testing times, but our focus is to ensure we capture whatever opportunities there are and will not miss out," says Andy Cairns, director of syndicated finance. "We will focus heavily on adding to our marketing and origination power and increasing distribution channels. This will help HSBC secure the best mandates and secure our position as the one of the key players in the Asian syndicated loans market."