This time two years ago, Citibank led the Taiwan syndicated loan rankings with just over $1 billion raised from eight deals. This was almost double its nearest rival, First Commercial Bank, which had registered $340 million from five fundraisings.
Since then the US giant has seen its dominance severely threatened as local banks, such as the previously inactive Taishin International Bank, adopt more aggressive strategies to gain greater market share. Two years on, the picture has completely changed.
Chinatrust now leads the way, having raised over $1.6 billion from 25 deals during the first half of 2004 - up from $250 million from six last year. Citibank languishes back in seventh with $551 million from seven transactions.
Shelia Chuang, general manager of investment banking at Chinatrust, says, "Chinatrust's rise up the table has been a result of a concerted effort to improve the bank's standing in the syndicated loan market".
It signalled its intentions back in the summer of 2003 with the hiring of four of Citibank's all conquering loan team. However, some claim this was more to do with disagreements about Citi's internal restructuring than any planned coup on the part of the Taiwanese bank.
But it aided Chinatrust in its pursuit of the coveted mandated arranger role for the NT$10.57 billion recapitalisation facility for the Taiwan Broadband, in which it acted along side Credit Lyonnais, DBS Bank and JPMorgan. The success of this transaction served notice that Taiwanese banks were willing to take on more risk than previously thought. It also broke away from the bulk of borrowers - top tier corporates looking for working capital loans.
Chuang goes on to say that, "while Chinatrust is not actively standing down from the traditional flow deal business, it is moving aggressively into the structured market."
This was shown by the award of a number of mandates from the borrowers like Eastern Multimedia and Taiwan Fixed Network - a capital reduction facility. In the year to the end of May, plain vanilla loans accounted for 83% of loan volumes at Chinatrust with the remaining 17% coming from structured products.
However, few Taiwanese houses have followed Chinatrust's lead and most continue to concentrate on plain vanilla loans. This is having a detrimental effect on pricing from the arrangers point of view as margins slide further downwards - a situation also witnessed in other Asian countries, most notably in Hong Kong.
Indeed, the vast funding requirements of the TFT-LCD industry has provided all local banks with plenty of lending opportunities and, although fees are low, the vast size of transactions have propped up fee incomes. But market observers suggest the most recent round of deals may be the last for a while as borrowers turn to the equity market to provide funding for their seventh generation plants.
This has not deterred the Chinatrust team, which is continuing to grow by hiring staff from both American and European houses. The bank now employs 30 professionals in its investment banking team in Taiwan, up from 12 a year ago, of which 15 are loan specialists.
A further seven are stationed in the newly established international corporate finance team in Hong Kong.
The expansion plan is two fold, with the aim of improving the bank's capabilities at home and abroad. The goal, as Ms Chuang describes it, is to, "beef up our international presence to increase our participation in the regional arena."
There is still some way to go though as the bank is only just starting to win mandates outside of Taiwan. The first came recently with the award of a joint mandate for a $100 million three year credit for Want Want Holdings alongside ABN AMRO and Rabobank.
Chinatrust has participated in 13 such transactions, but none so far as an active arranger. It has joined a handful as underwriter including Samsung Atofina and ICICI Bank.
Additionally, the bank is attempting to attract offshore borrowers to tap the liquid Taiwanese loan market. This latter aim was successfully achieved earlier this year via a $40 million fundraising for Moscow Narodny Bank, which acted through its Singapore branch.
While the issue size was small, the response was not, with seven banks signing up in syndication. The financing was heavily oversubscribed and increased from $25 million. Despite the increase, participants still had their allocations scaled back.
The pipeline for such deals is not overwhelming at present, but Moscow Narodny bank was convinced sufficiently impressed enough to come back for a further $41 million in May.
Taiwanese banks have traditionally concentrated on the domestic market and few have shown any great ambition to branch out into Asia, despite being active buyers of secondary paper throughout the region. Chinatrust is attempting to be one of the first to bridge this gap as a means to put its excessive liquidity to work.
Analysts suggest it has laid down the initial ground work to achieve this goal - especially with reference to its hiring policy. As a result it has proved that it is capable of competing with heavyweights such as Citibank on its own turf, but opinions are mixed about how long it will take before it can truly hold its own in the regional market.