Best Cash Management Bank
Citigroup
Citigroup has defended its position as the best cash management bank in Asia, keeping uncompromising competitors at bay for the moment. This year our judges were impressed by Citigroup's consistent growth in client acquisition, a steady transition to electronic banking channels, an ability to execute complex regional mandates and the development of new products that increase visibility and flexibility for corporate treasurers.
Citigroup won 1,845 new mandates from medium to large corporate clients in the first 10 months of the year worth just over $50 million in revenue. The bank also picked up 971 incremental mandates from existing clients in this segment, worth over $25 million in new revenue.
"We awarded our regional banking tender to Citigroup in 2005 mainly because of their keen understanding of our business and an ability to consistently deliver against the same in all markets," explains Annie Yong at TNT International Express, one of the bank's new corporate clients. Citigroup also continued to operate a strong financial institutions franchise, this year increasing its ownership of the non-bank-financial-institutions market.
On the product front, 2005 brought the long awaited roll-out of TreasuryVision, an information platform designed to give treasurers an accurate picture of the relationship between their cash flows and bottom lines. The challenge now for Citigroup is to become the number one provider in China where HSBC retains the upper hand. The bank is hoping that the hiring of 50 new cash management staff on the mainland this year will help them achieve this goal.
Best Cash Management Solutions Bank
Bank of America for LG Chemical
A cash management solution achieves its aim when a corporate treasurer can point to significant savings brought about by the new system. Hong Gi Kim, corporate treasurer at LG Chemical, can do just that when he speaks about the cash flow management system recently implemented by Bank of America.
"With this new process we can expect to save over a million dollars during the 12 months in China which puts LG Chemical in one of the most financially structured and competitive positions."
The solution involved creating a nationwide renminbi cash pool for LG Chemical's disparate entities in China. The company wanted to reduce its reliance on external borrowings and electronically integrate data for payment, collections and cash consolidation.
Bank of America achieved these goals by selecting one LG Chemical entity to open a pool header account, allowing other entities to join the scheme by signing joining letters and separating the concentration account from other daily operating accounts. Bank of America then adopted an automated sweeping structure with daylight overdraft facilities granted to each cash pool participant.
LG Chemical was also given manual control to sweep funds into sub-accounts at any time. As Kim testifies, the company has saved significantly on interest payments by removing the need to draw down on entrusted loans.
Cash collection times have been reduced from an average 3-5 days to only 1-2 days. And the company is saving on tax and stamp duties payable on entrusted loans. All-in-all a clever and cost-effective solution for the client.
Best Trade Finance Bank
HSBC
HSBC remains the leader in regional trade finance, continuing its push into new products and services, while still growing its letters of credit business. This year the bank increased the number of LCs it issued and negotiated by about 15%, bucking the worldwide trend towards open account trading.
HSBC is taking LC market share away from other banks that can no longer justify the cost of processing LCs when the fees are so thin. The bank's electronic platforms allow it to provide the service cheaper and to give customers a straight-through-processing experience.
Though, as a percentage, LCs now represent a smaller proportion of HSBC's overall trade volumes, which this year will total $170 billion. The bank's factoring and receivables business, for example, has increased significantly in 2005.
It is also growing in the area of supply chain financing launching an advanced vendor financing programme this year in 14 markets. The future for HSBC lies in diversifying its geographic sources of revenue and further tapping the SME market. While more than half of its business is still conducted in Hong Kong, profits are increasing at a greater rate in countries outside Hong Kong.
The top three markets for trade volume growth in 2005 were Thailand, India and Korea. One customer, Vincent Chan of Jordache International in Hong Kong, says market knowledge sets HSBC apart. "With the rapid changes in the textiles and garments industry, HSBC's presence worldwide gives us the confidence that the bank understands local trade practices and is able to provide crucial advisory services about the countries in which our trade partners are located."
Best Trade Solutions Bank
JPMorgan for Chartered Semiconductor
JPMorgan picks up this award for the second year running for another highly-structured trade finance solution, this time for Singapore's wafer manufacturer Chartered Semiconductor. The solution saw Chartered Semiconductor draw down on a $653 million medium term trade finance loan from JPMorgan and guaranteed by the US Export-Import Bank in order to purchase equipment for the first phase of a new wafer fabrication plant.
JPMorgan acted as advisor to the client and as arranger and facility agent for the loan which itself is divided into two tranches for drawdown and has an availability period of between two to four years with repayments due over succeeding five year periods. Chiefly, the solution achieved two things.
First, it allowed the company to organize a single financing package covering all anticipated purchase orders from a total of 19 exporters, without having to negotiate individual vendor financings. Second, it gave Chartered Semiconductor - a BBB-minus-rated company - a more cost effective alternative source of financing than tapping the bond markets.
JPMorgan's role was to successfully address some critical areas of concern for Ex-Im Bank including the company's credit worthiness through volatile industry cycles and the potential negative economic impact on US wafer producers. JPMorgan ensured efficient execution despite the challenges of coordinating the extensive paperwork from individual exporters required by Ex-Im Bank and the large number of purchase orders. The deal was the single largest long-term transaction completed by Ex-Im Bank in fiscal 2005.
Best Global Custodian
JPMorgan
JPMorgan continued to deliver product-rich and well-executed custody services to money management clients this year, increasing the size of its Asia-sourced asset pool to $524 billion. While the bank's growth in assets under custody has been smaller than that recorded by Bank of New York and Northern Trust this year, much of this can be attributed to the loss of the BT funds management business in Australia which was insourced to new owners Westpac.
This blip has allowed the bank's other markets to shine. Assets under custody for its businesses in Asia ex-Japan and Australia grew by 33%, much of this from incremental business.
The bank added another billion dollar account in China this year, confirming its dominant presence in this market where growth in assets under custody has tipped 163% over the past two years. Two new accounts were also picked up in Taiwan.
"JPMorgan provides custody to other insurance companies in the Taiwan market and is familiar with our industry and our local business needs. They also have a local customer support team here," says one of these new Taiwanese clients. On the product development front, the bank introduced three new services to its ACCESS platform including: a transaction initiation tool for non-SWIFT users; a self-service report builder that gives clients access to JPMorgan's data warehouse; and patent-pending authentication technology that allows the use of RSA SecureID tokens. The bank also introduced some fancy new foreign currency hedging, or overlay, products.
Best Sub-custodian
HSBC
Another clear victory for HSBC in this category. The bank increased assets under custody by more than 30% during the first nine months of the year, bringing its total book to just over $600 billion.
A quick tour around the region turns up more impressive numbers: 50% more new mandates in India than last year; the awarding of three new QFII accounts in China bringing its market share to well over 30% of QFII mandates; and the near doubling of business volumes in Japan in the last 24 months. On the product front, HSBC had a number of milestones in 2005.
It won a back-office outsourcing mandate in Indonesia, and in Australia it introduced an Automated Inventory Balance allocation tool which allows clients to manage trades according to priority guidelines. The bank has also continued its push into securities lending, using its natural advantage to offer both principal and agency solutions to borrowers.
In 2005, HSBC launched its securities lending product in Taiwan and it now claims to process about 70% of all lending volumes in that country. Global custodians like the way HSBC keeps them updated. "Market knowledge is delivered through high quality and timely market flashes," says one of the bank's top clients in the region. "These announcements articulate the subject clearly and precisely and include a comment on the impact to their clients."
