Why CTBC, Yuanta hit fresh heights in Taiwan

Taipei Fubon Bank also picks up an award, while Citi and Credit Suisse are honoured in international categories.

In May, FinanceAsia named the winners of its annual Country Awards for Achievement. Last month, winners were given ther awards at our annual awards dinner in Hong Kong. Today, we continue presenting the rationale for our decisions with a look at Singapore.

Best Bank:  CTBC Bank

CTBC Bank was the first Taiwanese bank to develop a regional banking franchise, having opened an office in New Delhi in 1996. Just over 20 years on it appears on track to accelerate those plans as it looks to increase its overseas revenue to 50% of total revenue in five years from 36% last year.

The island’s biggest bank by revenue now operates in multiple countries including Japan, China, Singapore, Indonesia, Vietnam, Hong Kong, and the Philippines, as competition between Taiwanese banks has spilled out overseas, especially in Southeast Asia.

In June 2016, CTBC Bank signed an agreement to acquire a 35.6% stake in Thailand’s LH Financial Group for Bt16.6 billion ($490 million), marking its second overseas acquisition in three years and its first foray into Southeast Asia through direct ownership of a local entity. The investment in LH Financial, the holding company of Thailand’s Land and Houses Bank, follows CTBC’s investment in Japan’s Tokyo Star Bank in 2014.

Last year CTBC also opened a representative office in Sydney and became the third Taiwanese lender to operate in Australia.

Through these overseas expansion plans, CTBC aims to diversify its income source and reduce its reliance on the local market, where excessive competition is putting pressure on profits and margins. CTBC Bank, even so, is starting from a position of relative strength after reporting a 12.8% increase in top-line growth to NT$344 billion ($11 billion) last year. It also improved its net interest margin by 5 basis points to 1.46%, despite repeated rate cuts over the last two years.

2016 was also an important year for CTBC Bank’s digital push. During the year the bank established an e-banking division responsible for e-channel strategies and innovative technologies, and a new development division responsible for payment strategies, developing data application plans and mobile payment services.

Best ECM House, Best Investment Bank, Best ECM House: Yuanta Securities

Yuanta Securities maintained its leading ECM position in Taiwan, topping the league table by raising $865 million from over 30 deals.

Over half of the value came from the underwriting of Nanya Technology’s $500 million convertible bond in January, the fourth largest of its kind in Taiwanese history.

Yuanta displayed excellent deal structuring and execution abilities for convertible bond issuers, thanks to its strong connection with Yuanta Bank to provide credit guarantees through offering asset swaps for their clients.

During the year Yuanta acted as a co-manager of Taiwan Mobile’s NT$10 billion ($329 million) domestic convertible bond, Taiwan’s largest convertible debt issue in nearly 10 years, as well as a lead manager in Silergy’s $125 million domestic convertible bond offering.

Yuanta was also involved in Inotera Memories’ $4 billion sale to Micron, one of the largest corporate mergers in Taiwanese history. With Yuanta acting as financial advisor to Inotera, the Taiwanese chipmaker closed the transaction in December last year, despite multiple regulatory and antitrust reviews.

During the award period, Yuanta remained Taiwan’s largest broker with an 11.63% market share, ranking first in brokerage, financing and stock lending, online trading as well as warrant issuance.

Best DCM House: Taipei Fubon Bank

Taipei Fubon Bank struck a nice balance between its loan and bond underwriting business that earned it FinanceAsia’s Best DCM House of the year.

In the syndicated loans market, Taipei Fubon Bank did not only win by scoring the largest market share among Taiwanese banks but also because of its excellent execution, which helped its clients to achieve the best outcome.

That was emphasised by the high oversubscription rate of syndicated loans arranged by Taipei Fubon Bank. During the award period, Taipei Fubon Bank’s loans scored an average oversubscription rate of 132.6%, the highest among all banks. It was also one of only two lenders to score over 120%.

The syndicated loans business is often described as a balance sheet game because banks can leverage off their own balance sheet to underwrite these loans instead of truly syndicating them out.

But while Taipei Fubon Bank has the financial resources to underwrite deals, it has the lowest holding level for these loan products, at 13.6%. Most other Taiwanese banks have an average holding level of more than 20%.

In terms of bond underwriting, Taipei Fubon Bank helped a range of clients to tap Taiwanese investors during the review period including Deutsche Bank, UBS, Morgan Stanley, Bank of Tokyo-Mitsubishi, BBVA, Societe Generale, BNP Paribas, and National Bank of Canada.

Best Private Bank: CTBC Private Bank

For CTBC Private Bank, 2016 was a year of consolidation as it streamlined its business across multiple offices, putting together resources to serve high-new-worth individuals (HNWIs) in more than 12 markets. That includes Australia, where it opened a representative office in Sydney to serve new affluent Taiwanese clients living there.

It remains the country’s leading provider of bancassurance products through its partnerships with insurance companies such as Allianz Global and China Life Insurance (Taiwan), offering more than 250 savings products and 500 property and life protection products.

In terms of investment products, CTBC Private Bank has teamed up with banks and asset managers to offer more than 1,900 offshore and onshore funds. Some of CTBC’s banking partners include HSBC, UBS and JP Morgan, while asset management partners include Fidelity, Franklin Templeton, BlackRock, and Pimco.

CTBC Private Bank also stayed head of the Taiwanese pack in terms of mutual fund sales with a 17% market share, well ahead of its closest rival on 11%. CTBC Private Bank’s portfolio now covers stocks and exchange-traded funds in Hong Kong, Shanghai, and the US.

Best International Bank: Citi

After finally recording some asset growth in 2015 following a four-year decline, Citi continued that positive trend in 2016, posting both top- and bottom-line growth.

It’s been a year of recovery for most Taiwanese banks and Citi has benefited significantly by taking full advantage of the following wind, as the island’s economic growth accelerated to 1.4% after slowing to a six-year nadir in 2015. It is clear that Citi is confident about Taiwan’s prospects; although total deposits remained at a similar level to 2015, it expanded total lending by over $1 billion last year.

The strategy appears to have borne fruit. Citi Taiwan booked a stellar 19% year-on-year gain in net profit, while its total revenue also grew 5.9% and its return-on-equity improved to 10.8% from 9% in 2015.

In 2016, Citi Taiwan was mandated by Chunghwa Post for up to $20 billion proprietary portfolio. Citi Taiwan’s current assets under custody for global custody services exceeds $120 billion.

Citi also became the first bank to introduce voice biometrics authentication in Taiwan. Since the new technology was put into work in May last year, Citi has received over 280,000 voiceprints and 2,000 new enrolls every day.

Citi last year also digitalised the process for opening savings accounts and applying for credit cards and personal loans. In addition, Citi Taiwan was the first Citi branch in the Asia-Pacific region to launch its Mobile eChat service.

Citi also remained one of Taiwan’s leading credit card issuers with the highest activation rate at 85%.

Best International Investment Bank: Credit Suisse

It was a relatively quiet year for M&A in Taiwan but Credit Suisse still stood out thanks to a pair of notable deals.

The Swiss bank won the mandate to advise Dutch semiconductor company ASML in its acquisition of Taiwan’s Hermes Microvision (HMI), a NT$100 billion ($3.1 billion) transaction announced in June last year.

The deal is the only billion-dollar transaction in Taiwan’s M&A landscape over the review period and was one of the few advisory opportunities for foreign investment banks.

ASML uses HMI-developed machines to examine the output of its own products. So buying Hermes Microvision would help ASML to secure an important element of its production process. The acquisition was earnings accretive to ASML and strengthened the company’s position in the growing chip qualification, monitoring, and control industry.

Credit Suisse advised ASML with regards to getting approvals from Taiwan’s Investment Commission, as well as antitrust regulators in Taiwan, Korea and Singapore.

In addition, Credit Suisse is financial advisor to Advanced Semiconductor Engineering (ASE) on its ongoing merger with Siliconware Precision Industries (SPIL), one of the most high-profile and controversial corporate merger cases in Taiwan. Credit is given to Credit Suisse for its effort to facilitate communication between the two management teams that eventually turned a hostile takeover into a negotiated merger on friendly terms. 

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