In May, FinanceAsia named the winners of its annual Country Awards. Today, we begin presenting the rationale for our decisions, to celebrate the best in banking from across the region, starting with the winners for Bangladesh, Cambodia, Hong Kong and Hong Kong (Chinese financial institutions).
As ever, the competition was extremely tight, with numerous financial institutions proving their resilience in the face of volatile financial markets and a more strenuous regulatory environment, as well as their prowess in mergers & acquisitions, equity capital markets (ECM) and debt capital markets (DCM).
This year, FinanceAsia also decided to establish an editorial advisory board to incorporate an element of peer review for the first time. So in addition to congratulating the winners, the editors would also like to thank the board members for their invaluable advice on the banks, brokers and law firms that were shortlisted and then selected.
Members of the editorial advisory board comprise:
Kalpana Desai – non-executive director at Janus Henderson; former chief executive Macquarie Capital Asia and head of Asia Pacific M&A at Bank of America Merrill Lynch
Terry Mahony – deputy chairman VinaCapital; former CIO emerging markets TCW
Sanjiv Misra – chairman Apollo Global Management Asia Pacific Advisory Board; president Phoenix Advisers; former head of Asia Pacific investment banking and corporate banking Citi
David Morton – advisor Helsinki Foundation Asia Pacific; former Asia Pacific head of corporate, financials and multinationals banking HSBC
Winners of our Country Awards will be honoured at FinanceAsia's gala dinner in Hong Kong on June 27.
BEST BANK: BRAC Bank
This is the first time that BRAC Bank has received this award, but it is well deserved because it is a financial institution that not only stands out in a domestic context but in an international one as well. For BRAC Bank is a unique animal and that has helped it to disassociate itself from a domestic banking sector marred by crony capitalism and non-performing loans.
BRAC Bank’s mantra is: People, Planet, Profit. And signs are that customers and investors alike believe it means it.
A lot of that has to do with BRAC Bank’s pioneering mobile money service, bKash, which helps the country’s unbanked population gain access to financial services.
The 51%-owned subsidiary has enabled BRAC Bank to achieve the kind of net interest margins that other banks can only dream of. The ratio hit 22% in the 2018 Financial Year.
It also helped net profits to reach BT5.67 billion ($67.17 million) in the same year, up 10.3% compared with 2017 according to S&P Global Market Intelligence figures.
The bank’s profitability and stable asset quality have also been underpinned by a relatively high current account/savings account (CASA) ratio of 46.75%, a capital adequacy ratio (CAR) of 15.7% and a non-performing loan (NPL) ratio of 3.61%, again according to S&P data.
As a result, BRAC Bank trades at a big premium to the rest of the market. It typically averages a valuation above two times price-to-book (P/B) and a forward price-to-earnings ratio (P/E) in the mid-teens.
BRAC’s achievements drew the attention of China’s Ant Financial, which has been more successful than many traditional financial institutions at buying big stakes in domestic players across the region. In late April 2018, the fintech giant signed an agreement to purchase 20% of bKash shares owned by Money in Motion, International Finance Corp (IFC) and the Bill and Melinda Gates Foundation.
The growth potential of bKash is clear. In 2021, it will celebrate its 10th anniversary. Over the past decade, it has helped just under a quarter of Bangladesh’s 164.7 million people gain access to financial services.
BRAC Bank itself turns 20 in 2021 and currently has a customer base of 1.2 million. It has forged a particularly strong business among small- to medium-sized enterprises (SMEs), building from its roots as the offshoot of a non-government organization (NGO).
Under the guidance of chief executive, Selim Hussain, it wants SME lending to account for more than half of its loan book by 2020.
BEST INVESTMENT BANK: Eastern Bank
In a country with very little pure investment banking activity, this award recognizes corporate banking in its widest sense. And this is Eastern Bank’s great selling point.
For Eastern Bank services the highest quality companies and has managed to ring-fence itself from the country’s increasingly distressed banking sector. Chief executive Ali Reza Iftekhar is the first to admit that countrywide NPL ratios in the double-digits are “totally unacceptable”.
But some industry analysts and economists believe the actual figure may be close to 25%, leaving fund managers increasingly concerned about when the connected lending, which is causing it, will finally come to a head.
Eastern Bank has a different story to tell and it is why it has won the award. Its NPL ratio stood at 2.3% in 2018, according to S&P Global Market Intelligence figures. And bank officials are confident that the ratio will drop below 2% by the end of 2019, extending the improving trend from 3.25% in 2015.
As FinanceAsia has previously highlighted, Eastern Bank believes its low NPL ratio can be attributed to staff training and international certification. In turn, this has helped the bank to achieve the highest profitability per bank employee in the country, beating even the international banks.
Eastern Bank’s current focus is helping to finance the government’s 100 economic zones, which are being set up all over the country to generate up to $40 billion of export income from foreign and local investors by 2030.
During 2018, Eastern Bank was behind one such landmark deal: an $82 million loan for Meghna Sugar Refinery to build a plant in the Maghna Economic Zone in Narayanganj.
The bank’s financing partner, DEG, is also new. The two signed a strategic partnership agreement in 2018, enabling three other development finance institutions signed up to the loan: the Netherlands’ FMO, Austria’s OeEB and the Islamic Development Bank’s ICB.
In addition, Eastern Bank is keen to increase Chinese investment in Bangladesh and 2018 marked the year when it obtained permission to set up a representative office in Guangzhou.
BEST INTERNATIONAL BANK, BEST INTERNATIONAL INVESTMENT BANK: Standard Chartered
Standard Chartered remains in a league of its own when it comes to winning these two awards. And over the most recent awards period, it created even more clear water between itself and the rest of the industry.
During 2018, it was behind a series of landmark transactions in a country that generally struggles to generate deals above $100 million. Most striking of all was the acquisition of Dhaka United Tobacco by Japan Tobacco.
Standard Chartered was the exclusive financial advisor for the $1.47 billion takeover, which represents the largest-ever foreign private investment into Bangladesh.
If that was not enough, Standard Chartered was also the only foreign bank involved in the strategic acquisition of a 25% stake in the Dhaka Stock Exchange by the Shenzhen and Shanghai stock exchanges.
What both deals underscore is the success of the country’s two key economic corridors with China and Japan. They also bear witness to Standard Chartered’s key strength facilitating cross border trade and investment.
Another first last year was the issuance of a Standby Letter of Credit that facilitated the import of 2.5 million tonnes of Qatari liquefied natural gas (LNG) into Bangladesh for the next 15 years. Overall, Standard Chartered accounted for 30% of the country’s Letter of Credit confirmation business.
Standard Chartered also provided end-to-end support for a greenfield investment by Square Pharmaceuticals in a pharmaceutical manufacturing plant in Nairobi, Kenya. In addition, it arranged the foreign currency financing and part of the local currency financing for a transaction that supported the development of the first utility-scale solar power plant feeding Bangladesh’s national electric grid.
One of the challenges was how to structure a deal with such a long maturity – 15 years – beyond the level that commercial banks would normally have been comfortable with. The answer was a structure and repayment mechanism that aligned the financing needs with the risk appetite of all stakeholders.
The bank’s dominant presence meant that it accounted for 52% of Bangladesh’s security services business in 2018, 25% of its US dollar clearing, 8% of its external trade financing and 15% of its credit card spend. And, as of June 2018, Standard Chartered accounted for 63% of all foreign bank-financing of small and medium enterprises (SMEs) in Bangladesh.
Standard Chartered also made it easier for foreign companies to do business in Bangladesh by offering technological solutions. For Unilever, for example, it implemented a Direct Debit Instruction solution. And where electronic collections were not possible, Standard Chartered created a mobile image-based collection solution.
Based on published financials, Standard Chartered Bank was the most profitable bank in Bangladesh in 2018, its net profit surging by 32.5% year-on-year to Tk11.29 billion ($133.5 million).
BEST BANK: ACLEDA Bank
Over the past year, for example, we have seen a debut offshore dollar bond by casino-operator NagaCorp and two domestic bond issues from microfinance lenders Hattha Kaksekar and LOLC. The government also intends to begin issuing treasury bonds within the next three years.
In the banking sector one institution stands out.
ACLEDA Bank is Cambodia’s largest domestically owned bank by assets. At the end of 2018, these totaled $5.64 billion compared with $5.24 billion the year before.
Uncertainties relating to last summer’s general elections did not help to boost profitability during the year under review. But ACLEDA Bank used the time to boost staff training to underpin growth this financial year.
These growth prospects are backed by some solid financial ratios for what is a frontier market. NPLs, for instance, stood at just 1.75% in 2018, down from 2.16% the year before, according to S&P Global Market Intelligence figures.
The bank also continues to forge international partnerships to propel its development. In 2018, it expanded a strategic partnership with Prudential. This enables the latter’s customers to pay their life insurance premiums through ACLEDA Bank’s mobile app, Unity ToanChet.
ACLEDA launched a debit card too, in partnership with Japan’s JCB International, during the awards period. QR codes have also gained ground after ACLEDA Bank signed an agreement with the Phnom Penh municipal government to allow citizens to start using them on bus and ferry services.
BEST BANK, BEST INVESTMENT BANK, BEST BROKER, BEST DCM HOUSE, BEST ECM HOUSE, BEST PRIVATE BANK: HSBC
A cursory glance at the newspaper headlines in Hong Kong suggests things are not looking so rosy for HSBC.
Firstly, there is widespread discussion about the six new digital banking licenses the government has issued. Goldman Sachs, for one, suggests two-thirds of annual retail banking revenue could be up for grabs, which would not be good news for HSBC given that 57.9% of group profits came from the Territory in 2018.
And then there are customer satisfaction levels, which data providers say are much lower in Hong Kong than in other developed markets.
But what shines through from HSBC itself is a far more upbeat mood. There’s an acknowledgement that the bank has had a difficult few years improving its compliance with financial crime regulations, frustrating many of its existing customers due to the additional security checks.
But the bank appears to have returned to what it does best: leveraging its enormous global platform to create synergies between different business groups.
HSBC officials also say it has no need for a separate digital license due to the degree to which it has already invested heavily in new technology.
It intends to maintain market share through its own digital e-payments system, launching PayMe in late 2017. By the end of the review period, the smartphone app had gained 1.5 million registered users able to transfer money freely and instantly between any Hong Kong bank. It is also poised to launch PayMe for business bank clients, enabling merchants to accept digital payments with a mobile device.
The bank has also been upping the ante with its SBC Reward+ programme, which allows customers to pay for credit card purchases using points. And it is doing its bit to support an ageing society by introducing 180 dementia ambassadors at branches across Hong Kong.
In corporate banking, HSBC remains at the forefront of the big themes surrounding Hong Kong’s future: from sustainable finance to the internationalization of the renminbi and the development of the Greater Bay Area.
As ever, trade remains the lifeblood flowing through the bank’s veins. In 2018, this prompted it to extend the functionality of its Trade Transaction Tracker, which gives clients end-to-end transaction tracking. This now incorporates trade loans and bank-guaranteed transactions on top of the original documentary credits and collections transactions.
HSBC’s longstanding corporate relationships also help it to maintain a dominant presence in investment banking too.
During the awards period, HSBC acted as a bookrunner on 16 of 18 bond issues by Hong Kong borrowers. It has an extremely well entrenched position at the top of the bond league tables.
It also maintained a strong showing on the ECM side with a consistent flow of repeat business.
One notable client in that respect was Link REIT. HSBC acted on two transactions for the property group. In March 2019, it was sole structuring advisor for a $510 million convertible bond, which represented the first-ever green equity-linked deal from Asia ex-Japan. In addition, it acted as sole financial advisor for the disposal of 12 properties totaling $1.5 billion.
One of the big ECM trends so far this year has been a high level of placements and blocks compared with initial public offerings (IPOs). HSBC, again, has been at the vanguard, acting as sole bookrunner for a $296 million deal for Power Asset Holdings in January.
HSBC’s primary market business is backed by an equally strong secondary market trading and research platform. The bank’s Asian research coverage has a very heavy weighting towards Hong Kong and China, encompassing individual company and thematic research.
Its monthly bond market publication, The View, is by far the most comprehensive fixed-income research publication in Asia. Its other regular publications include China Onshore Insights and From The Horse’s Mouth, which provide colour and data about changes to China’s financial markets and economy that other banks struggle to match.
Last but not least, there is HSBC’s private banking business. Under new chief executive John Flint this segment is gaining greater emphasis within the overall group. And Hong Kong remains the key, accounting for 94% of HSBC’s private banking pre-tax profits last year in the Asia-Pacific region.
In September, HSBC announced ambitious growth plans, committing to spend $100 million on new technology over the next five years. It also plans to double client assets and is in the process of hiring 700 new staff members to service clients in Hong Kong and Singapore.
Many Asian banks are ramping up their private banking businesses but HSBC stands in a uniquely strong position because it can leverage such a wide geographical base and large corporate client book. Officials say this is already reaping dividends.
About five years ago, the private banking business was gaining about half of its clients as referrals from other parts of the bank. Today, officials say that number stands closer to 70%.
BEST LAW FIRM: King & Wood Mallesons
This is a new award designed to recognise the local lawyers whose work form the bedrock for a transaction’s success but who rarely garner the same publicity as the investment banks that bring them to market. It is also an award designed to highlight the emergence of Asian law firms, which have gained prominence alongside the ever-present international ones.
Nowhere is the competition between law firms more intense than in Hong Kong. But there is one firm, headquartered in the Territory, which has carved out a strong pan-Asian footprint for itself across debt, equity and M&A.
During the awards period, King & Wood Mallesons acted on many of the deals FinanceAsia considered the best and is therefore a very worthy winner. This was particularly evident on the equity side.
King & Wood Mallesons advised China Tower Corporation on its HK$54.33 billion ($6.92 billion) Hong Kong IPO last August. It was not only the world’s largest flotation in two years but also one of the few Hong Kong IPOs that actually traded up during 2018.
Then there was Pinduoduo, another rare example of a roaring success on the Nasdaq during 2018. The law firm acted as China counsel and also assisted the e-commerce firm throughout its pre-IPO financing.
King & Wood Mallesons also displayed its innovative capabilities after acting for Qingdao Haier on a novel A and D dual-listing offering in China and Frankfurt.
It is well positioned to win future deals too after hiring Tony Jacobsen from the HKEX last August. The former senior vice president of the IPO vetting department is an especially valuable addition at a time when the regulator has taken a number of investment banks to task for their IPO due diligence.
On the M&A side, a number of transactions stand out including GTA Semiconductor’s privatisation by way of merger by absorption, a rarity in Hong Kong.
Then there was Geely Holding’s acquisition of a controlling interest in Saxo Bank. This was particularly complex given that it involved a large number of subsidiary companies across 10 jurisdictions and an equally large number of shareholders, including founders and private equity groups such as TPG.
And then finally there are King & Wood Mallesons’s numerous debt deals. Standouts here include SF Holdings, which launched its first offshore bond offering in 2018.
BEST INTERNATIONAL BANK: Citi
With 117 years of history in Hong Kong, Citi is one of the city’s largest foreign financial institutions. The way it uses that history to look to the future is why we’ve named it Hong Kong’s Best International Bank this year.
Citi is rightly proud of the relationships it has built up with Fung Group, Hutchison/Cheung Kong Group, BEA and AIA Group. But perhaps more notable is its three-decade relationship with Gordon Wu and Hopewell Holdings. In December, Citi advised on the $4.3 billion privatisation of Hopewell Holdings and provided $2.7 billion of acquisition financing into the bargain.
It was a canny deal against a background of escalating trade tensions between China and the US and wobbles in the Hong Kong property market.
What gave Gordon Wu confidence to proceed was his long-standing relationship with Citi was the success of previous deals. The bank was joint bookrunner on its $800 million spin-off initial public offering (IPO) of Hopewell Properties and joint lead manager on the $400 million spin-off IPO of Hopewell Highway Infrastructure in 2003. It was also ADR bank for Hopewell Holdings and Hopewell Highway Infrastructure and into the bargain committed $91 million facilities in 2006 and 2007.
During the review period the bank leveraged its platform to work across all products. It executed three out of five $1.5 billion-plus equity and equity-linked deals, including the $14 billion Series C equity financing for Ant Financial. It also handled two-thirds of the year’s 18 $500 million-plus fixed income issuance deals, including BOC HK’s $3 billion Additional tier-1 Capital Securities deal and Bank of China’s $3 billion Multi Currency FRN – the largest-ever bond offering from a Hong Kong financial institution and the largest euro transaction from a Asian financial institution in 2018, respectively.
Citi also worked on seven of 12 $1 billion-plus M&A deals. Highlights here include advising CK Hutchison Holdings on its acquisition of the remaining 50% stake in Wind Tre from VEON for $16.3 billion and China COSCO’s $8.4 billion acquisition of Orient Overseas International to create the world’s third-largest container liner.
The US bank embraced new technology as well as its heritage. It was the first bank in Hong Kong to adopt open banking and make available its Application Programming Interfaces (APIs) to the public. Last year, Citi Credit Cards collaborated with eight partners to launch various API use cases, creating simplified and value-added solutions for Citi card customers.
BEST INTERNATIONAL INVESTMENT BANK: Goldman Sachs
Goldman Sachs is justifiably named the best foreign investment bank in Hong Kong this year. It has performed slickly and consistently across asset classes and has maintained its clean bill of regulatory health throughout.
Goldman Sachs has shone, particularly, in equity markets. It led some of the most significant and “first of its kind” IPOs in Hong Kong in 2018. Last year it ranked first in Asia ex-Japan equity and equity-linked offerings, first in Hong Kong equity and equity-linked offerings and first in sole book equity offerings in Hong Kong. The bank has raised $5 billion in 29 sole book deals since 2010.
In August, for example, it was joint sponsor, joint global coordinator, joint bookrunner, joint lead manager and sole stabilisation agent for China Tower Corporation $7.5 billion IPO. This was the largest Hong Kong IPO since 2011 and the second-largest IPO globally since 2015. But Goldman also led Xiaomi’s $5.4 billion IPO, the largest tech IPO globally since Alibaba in 2014; Meituan Dianping’s $4.2 billion IPO, the largest-ever Internet IPO on the Hong Kong Stock Exchange; and WuXi AppTec’s $1.1 billion IPO, the region’s largest healthcare IPO last year.
The bank was also active in DCM. What stands out here is not just the volume of deals but the fact they represented repeat business. Goldman Sachs was joint global coordinator on ICBC Financial Leasing’s $1.5bn dual-tranche senior unsecured notes at the end of February and is the only international bank to have been mandated on all of ICBC’s public DCM deals since September 2015.
It was a similar story with Country Garden Holdings. Goldman Sachs was joint global coordinator, joint lead manager and joint bookrunner on its $1.5 billion dual-tranche Reg S notes at the end of March. The bank has now led 28 capital markets transactions for the property developer since 2010.
It is often easy to skip past M&A activity but Goldman Sachs has ranked first in sell-side M&A advisory in Asia and Hong Kong since 1997 and was ranked second in Hong Kong’s announced and completed M&A league tables.
Of particular note is Goldman’s role as exclusive financial advisor to Hong Kong broadband provider HKBN’s $1.3 billion acquisition of WTT, formerly known as Wharf T&T, in August last year. The deal shook up the domestic landscape and created a credible alternative to the overweening incumbent, Hong Kong Telecommunications (HKT). The transaction helped to underscore the bank’s leading presence in the region’s telecommunications, media and technology investment banking sectors and its role as the go-to advisor for strategic M&A transactions.
BEST BANK: Bank of China (Hong Kong)
It was a record year for profits last year at Bank of China (Hong Kong), or BOCHK. Net profit grew by 12% to HK$31.6 billion ($4.03 billion), helping the bank to consolidate its position as top dog among the offshore Chinese banking fraternity.
BOCHK is three times the size of its nearest Chinese rival by assets and four times by profits. However, it still trades at a valuation discount to Hong Kong’s Hang Seng Bank, which generally records higher profits relative to its asset base.
Many analysts believe this is likely to change because of the development of the Greater Bay Area. BOCHK is seen as uniquely positioned to take advantage of the potential new opportunities thanks to its strength in Hong Kong, mainland China and Macau, where it also ranks as the second-largest bank by assets.
Bank officials say it wants to be the first choice cross-border bank for northbound Hong Kong residents. And it is already starting to show the lead where account opening and mobile payments are concerned.
For example, it was the first bank to secure regulatory approval to launch a pilot mainland personal account-opening service in Hong Kong that doesn’t require having to travel to the mainland and present a proof-of-address there. This bank account can also be linked to Chinese mobile payment services like AliPay and WeChat pay, making payments in China far easier.
In December, the government went one stage further by allowing users of the bank’s BoC Pay app to make payments on the Chinese mainland using funds from any Hong Kong bank account. It also allows customers to make QR code payments to 9.5 million merchants on the mainland and 1,000 in Hong Kong.
BOCHK is also entering the fintech arena after successfully applying for one of the Hong Kong government’s new digital banking licenses. The new operation, called Livi, is a joint venture that also comprises JD.com and Jardine Matheson. It aims to target small-to-medium-sized businesses as well as individuals seeking cash loans.
Bank officials say BOCHK’s overall strategy is to deepen the bank’s commitment to Hong Kong and it has been making good progress after increasing its number of mid-to-high-end clients (up 17.5%) in 2018 and private banking clients (up 27.3%).
And then of course there is its renminbi clearing business. In 2018, it processed about 75% of the world’s offshore renminbi clearing transactions.
BEST INVESTMENT BANK, BEST ECM HOUSE: CICC
China International Capital Corp (CICC) has come a long way since its inception as China’s first joint-venture investment bank in 1995. But it is still worth flagging these roots to highlight how important they were in 2018.
Its original joint venture partner, Morgan Stanley, seeded CICC with strong risk-management capabilities and Chinese walls. These helped CICC to navigate and prosper in the face of exceptionally difficult capital markets during 2018. It continued bringing the best deals to market to the benefit of both issuer and investor.
The securities house also continues to expand its international platform adding Frankfurt to its roster of international investment banking clusters in 2018. This turned out to be a very good springboard for CICC to act as a bookrunner on the first dual German and Shanghai listing for Qingdao Haier during 2018.
CICC was also front and centre for two of the best-performing and most highly rated Chinese IPOs of 2018 for China Tower Corp (CTC) and Pinduoduo. This, however, was not how it seemed it would turn out at the beginning of the year when all eyes were focused on tech company Xiaomi.
Yet it was CICC’s IPO for CTC, which eventually stood out, traded up and left the whole market feeling happy. What had at first seemed like an old-school play became a way to trade the coming of 5G. CICC acted as joint sponsor on the deal – the world’s second largest IPO in two years – raising HK$54.33 billion ($6.92 billion), according to S&P Global Market Intelligence data.
And then there was Pinduoduo, which executed one of the hottest Nasdaq deals of the year. CICC was a joint bookrunner for the e-commerce operator’s $1.63 billion IPO last July and $1.37 billion follow-on offering seven months later.
When it comes to M&A, CICC strove to maintain its leading position by staying abreast of the latest trends including increased inbound M&A to China. Historically, CICC has acted as an advisor to the Chinese side but increasingly it has begun representing the international one instead. For example, CICC advised Spanish blood products company Grifols when it acquired a 26.2% stake in Shanghai RAAS in exchange for a 45% stake in its US division.
In Hong Kong, CICC also acted for Red Star Macalline, which completed the market’s first H share repurchase via a voluntary cash offer.
The weakest part of CICC’s investment banking operations has always been DCM. However, the securities house has been making a big push to change this over the past few years, hiring a number of bankers from Standard Chartered’s China team. This is now starting to pay dividends, with the securities house racing up the league table.
During the awards period, CICC acted on 76 bonds that raised $40.38 billion and helped 19 first-time issuers to gain a rating. Standout transactions include its joint global coordinator’s role on debut offshore bond deals for Shenzhen Investment Holding Company, which raised $700 million in September and Chengdu Hi-Tech Investment Group, which raised $300 million in June.
BEST BROKER: Haitong International
Haitong International is known for its aggressive expansion and so far that strategy has paid off. Unlike its major competitors in this category, Haitong has yet to be reprimanded and fined by Hong Kong’s Securities & Futures Commission (SFC). Its clean slate is a strong factor in why it won this award.
Back in 2017, Haitong became an elite category A broker, joining a pantheon of international securities house in what remains a highly fragmented market.
One of its landmark achievements in 2018 was to become the Nasdaq’s first Chinese market maker. However, much of the year across both Hong Kong and the US was characterised by difficult and volatile markets particularly during the second half.
Nevertheless, Haitong’s strong derivatives platform meant it was able to capitalise on a big jump in over-the-counter activity in Hong Kong. Total structured product turnover, for example, surged by 70% to HK$14.7 billion ($1.87 billion) over the course of the year.
Haitong is the only Chinese broker that is active in both listed structured products and listed options market-making. It is also the Territory’s biggest trader for single stock warrants, above Credit Suisse and JP Morgan. During 2018, it accounted for 1,219 warrants, plus 965 callable bull and bear contracts.
This derivatives success was recognised by HKEX last December when it unveiled its 2018 awards. It ranked Haitong second for stock futures turnover behind Eclipse Options and top for turnover in both exchange-traded funds and leveraged and inverse products.
Haitong last year also added 760 new professional investors and saw its assets under management (AUM) grow by 52% year-on-year to HK$156.4 billion ($19.95 billion), in spite of the heightened market volatility.
At the end of the awards period, it had a broad client base of over 200,000 institutional, corporate and individual investors, plus four branches in Hong Kong and Macau.
Retail investors have traditionally formed the core of Haitong’s business, accounting for 76% of commission income in 2018. But the group has been investing more heavily in its institutional business over the past few years, enabling it to compete more effectively with the likes of CICC and CLSA. It now covers 30 markets globally and views its electronic/proprietary algorithmic capabilities as a major differentiating factor.
BEST DCM HOUSE: BOCI
BOCI’s hold over this award got a lot stronger towards the end of 2018 after the bank began marshalling its competing DCM brands under BOCI’s banner. This should now enable BOCI to make further inroads across Asia and begin to challenge the leading international banks as the region’s best bond house.
In 2018, for example, it expanded its client reach to the Sri Lankan sovereign. It also took a small role on a deal for KDB Life, becoming the first Chinese institution to act on a bond deal by a Korean financial institution.
But winning the accolade of best bond house is not just about which clients an institution works for; it is as much about its execution abilities as it is about league table dominance.
And as FinanceAsia’s recent coverage has highlighted, there have been growing calls for changes in the way that dollar and other foreign-currency bonds are executed out of Hong Kong. Leading fund managers have become increasingly vocal about the lack of transparency in order books and the mispriced deals clogged with relationship banks and brokers.
BOCI, however, is often singled out as one of the few exceptions to the norm.
Rival international banks commend its determination to adhere to best market practices. In contrast to some of its rivals, BOCI’s originate and distribute model allowed it to control risk more carefully during 2018 and avoid getting caught in the crosshairs of the market’s steep downturn.
Bond markets were extremely volatile throughout the year but they were also punctuated by several noteworthy transactions on which BOCI acted as a bookrunner.
In 2018, it completed close to 130 bond offerings. They included China Vanke’s $650 million floating rate note (FRN), the first of its kind by a Chinese property company. They also included Agile Group’s $400 million tap in mid-July, which re-opened the high yield market after a particularly difficult period.
BOCI also brought debut Chinese issuers to market including China Huadian, which raised $600 million from a five-year bond last May.
BEST PRIVATE BANK: CMB Private Banking
This award was always CMB’s to lose given that it is China’s largest private bank by AUM. It also has ambitions to be Asia’s largest.
During 2018, it booked about 10% of its Rmb2 trillion ($289.6 billion) AUM through Hong Kong from about 8% of its 72,000 clients.
Capital controls make offshore private banking more complicated for Chinese banks compared with their peers around the rest of Asia. It is one of the reasons why CMB Private Banking has three different brands based in Hong Kong: CMBI, Wing Lung Bank and CMB Hong Kong branch.
The lack of unified branding is generally a recipe for confusion but CMB emphasises that each brand serves a necessary purpose. As such, the bank’s onshore relationship managers refer clients to the most appropriate channel relative to their private banking needs and what the regulations allow.
The bank’s development strategy is based on the idea of “Chinese heritage, global insights.” The backbone for the latter is an open platform, hosting about 1,000 financial products from international partners spanning cash equities, bonds, alternatives and structured products.
That wide product range helped to cement CMB’s hold over this award. In addition to its financial service offerings, the bank also puts a great deal of emphasis on softer services such as finding international schools and medical facilities for its clients.
One area it continues to develop is networking events. In 2018, for example, it set up kids summer camps in London, New York and Singapore.