In May, we announced the winners of this year's Country Awards. Today, we are pleased to announce the rationale for our decisions covering Bangladesh, China, CLM (Cambodia, Laos and Myanmar) and Hong Kong - including Hong Kong's Chinese financial institutions.
See below for details of other winners:
- Click here for India, Indonesia, Malaysia and Mongolia
- Click here for Pakistan, the Philippines, Singapore, South Korea and Sri Lanka
- Click here for Taiwan, Thailand and Vietnam
It is a special year for FinanceAsia, marking a quarter of a century since we were first established. For the winners of these awards, it has also been a year like no other.
The Covid-19 pandemic has presented enormous challenges, but also great opportunities for some institutions, particularly those that were already digitally adept.
The past year has also been one that has shown the financial services industry in its best light. Banks have supported Covid-19 impacted clients when needed, often in association with government schemes, while the whole sector is advancing the corporate world's transition to a greener one.
In addition to congratulating the winners, we would also like to thank our editorial advisory board members who helped us with our decisions on the banks, brokers, law firms and rating agencies that were shortlisted and selected.
They were:
Glenn Kim - Principal Investable Oceans; chair Financial Services Capital; advisory board Fluency; former senior advisor to Deutschland Finanzagentur, Iceland Ministry of Finance, Greece Ministry of Finance, plus head of public sector and emerging markets EMEA and Asia and Japan DCM Lehman Brothers.
Terry Mahony - deputy chairman VinaCapital; former CIO emerging markets equities TCW and Indochina Capital, plus launch CIO of HSBC's GEM fund.
David Morton - advisor Helsinki Foundation Asia Pacific and chairman Yojee; former Asia Pacific head of corporate, financials and multinationals banking HSBC.
Sangeeta Venkatesan - chairman FairVine Super; chief executive Applegrove Capital; board member WiBF; former chief operating officer Commonwealth Bank of Australia and Nomura.
Susan Yuen - non-executive director Alliance Bank Malaysia; former regional CEO NBAD and CEO ANZ Hong Kong, plus head of corporate and institutional banking HSBC Malaysia and head of multinationals banking Maybank.
BANGLADESH
DOMESTIC
BEST BANK: The City Bank
It’s been a few years since City Bank took the crown in Bangladesh, but it has come roaring back under CEO, Mashrur Arefin, who took up the post at the beginning of 2019.
The improvement in the bank’s financials during 2020 was striking, all the more so against a regional backdrop in which so many banks struggled to grow profitability in the face of Covid-19. S&P Global Market Intelligence data shows that net profit grew 65.6% to BT4.36 billion ($51.48 million).
Only BRAC Bank has a higher Ba3 credit rating, but in 2020 its profitability and efficiency metrics all slipped below City Bank, which leads the rest of the country’s banking industry with a B1 rating.
Nearly all of City Bank’s efficiency metrics showed a marked improvement during the 2020 Financial Year. Its return on average equity (ROAE) rose from 10.42% to 16.75% and its return on average assets (ROAA) from 0.77% to 1.13% according to S&P data.
One of the main reasons why the bank has done so well is because it has been able to effectively halve its cost of deposits over the past few years from 5.5% to 2.5% as of the first quarter of 2021. At the same time, it was able to expand its customer base by 140,000 in 2020 bringing the total number of retail clients to 2.1 million.
City Bank is also widening its remit beyond its traditional affluent retail customer base to embrace financial inclusion. One big step was setting up an agency network in rural areas. This grew 268% in 2020 and now encompasses 1,416 outlets.
The second is its partnership with BRAC Bank and the latter’s bKash mobile money system. A nano loan pilot scheme was launched in 2020 and has gone fully live in the spring of 2021. Any bKash user can now request and receive a loan of up to BT10,000.
BEST INVESTMENT BANK: IDLC Investments
This award was a pretty tough call between City Bank Capital and IDLC Investments. The former had yet another strong and innovative year, bringing Bangladesh’s first Tier 1 capital instrument for example.
However, we felt that IDLC had an edge because of its work across ECM and M&A. The overall size of Bangladesh’s stock market and its deal flow does not reflect the country’s GDP. So any deals that help to rectify that imbalance stand out.
IDLC brought two such deals in 2020, giving it a 65.81% market share for initial public offerings (IPOs). And unlike many domestic flotations, both of IDLC’s deals traded up in the secondary market.
The one that really stood out was the BT5.2 billion ($62 million) IPO of the country’s second largest mobile company, Robi Axiata. IDLC was previously a financial advisor for the merger, which created a joint venture between India’s Bharti Airtel and Malaysia’s Axiata.
The subsequent equity deal not only represented the country’s largest-ever IPO, but also a rare instance of a multinational listing in Bangladesh. It was a huge success, especially from an investor’s standpoint.
Having been priced at BT10, the stock rose 50% the day it began trading and had quintupled by spring 2021. In the process, Robit Axiata swung from a valuation discount to a premium against its peers on an EV/Ebitda basis.
IDLC’s other standout deal was for the country’s first listed engineering and construction firm, Mir Akhter Hossain. The latter raised BT1.2 billion via a deal that was priced around 12 times forward earnings.
Retail investors were able to purchase it at a 10% discount to the BT60 institutional price and have also made a decent secondary market return. By May 2021, the shares were trading around the Bt68 level.
On the M&A side, IDLC’s main work involved the merger of Confidence Power, which has four power plants with Confidence Oil and Shipping, which supplies their fuel. The deal closed last autumn and forms part of a larger group restructuring.
INTERNATIONAL
BEST BANK: Standard Chartered
It has been another impressive year for Standard Chartered in Bangladesh. The bank has a stronghold on this award and remains extremely well entrenched in a country that it has now operated in for 116 years.
Assets and profitability continued to advance during the 2020 financial year, as did many of the bank’s efficiency metrics. The former grew from BT377.89 billion ($4.45 billion) to BT421.72 billion according to S&P Global Market Intelligence data. This helped to boost profitability from BT12.85 billion to BT13.65 billion.
The bank has always been able to keep non-performing loans under control thanks to its position banking the country’s strongest credits and multinationals. As a result, the ratio actually improved in the face of Covid-19, tightening from 1.67% to 1.62%.
Likewise, Standard Chartered has very good cost control, with the cost-to-income ratio dropping from 26.2% to 24.54% according to S&P.
Standard Chartered maintains a very lucrative role as a facilitator for cross-border financing. It has a 27% share of US dollar clearing and routed 9% of the country’s imports and 8% of its exports during 2020.
It applied its digital expertise to aid the export sector, executing the country’s first blockchain transaction after issuing a Letter of Credit (LoC) for a client over the Contour network.
It is also helping its clients to go cashless. In 2020, the bank on-boarded its first client to S2B Pay, a digital collections solution. This one-stop payments platform enables customers to complete their collections through a variety of digital channels including mobile apps and QR codes.
On the commercial and investment banking side, Standard Chartered has an ongoing role in some of the nation’s key infrastructure projects including the $1.2 billion Dhaka Elevated Expressway, the $1.98 billion Bangabandhu Railway Bridge and the $642 million Meghnaghat Power project.
BEST INVESTMENT BANK: HSBC
One of HSBC’s strongest suits is its expertise in sustainable finance. It has a global commitment to provide $100 billion in financing and investments to the sector by 2025.
It was particularly pleasing to see the concept introduced to Bangladesh during 2020. In June 2020, the bank completed a BT1 billion ($11.8 million) sustainability linked loan for Square Group.
The conglomerate is a signatory of the United Nations Global Compact (UNGC) and is using the proceeds to improve its renewable energy metrics. It becomes eligible for interest rate reductions if it achieves pre-determined renewable energy targets.
Ahead of the loan, Square Group had already installed solar panels on its factory roofs that were able to generate 2.6 megawatts (MW). Managing Director, Tapan Chowdhury, has said that funds will be used to help it increase this to 8MW.
It was the sustainability loan that clinched the award for HSBC. But the bank has been active in the country since the mid-1990s and been a keen financier of the government’s infrastructure programme.
During 2020, its most notable deal was a BT1.9 billion facility for DBL Industrial Park. The loan had two parts: a BT1.75 billion DFI (Development Finance Institution) tranche with a 12-year maturity and a BT150 million commercial tranche with a five-year maturity.
The DFI tranche represented one of the longest tenors in the domestic market. The combination of the two tranches enabled DBL to achieve a much higher average maturity to meet its capex needs.
CLM (CAMBODIA, LAOS, MYANMAR)
BEST BANK: ACLEDA Bank
The Cambodian economy may have contracted 3.1% in 2020, but ACLEDA Bank continued to expand as if the underlying economy was still on its pre Covid-19 fast track trajectory.
During the 2020 Financial Year, assets rose 6% to $6.55 billion and net profit was up 17% to $141.5 million according to S&P Global Market Financial data. The former only represented a slight dip on 2019’s 8.6% asset growth, while the beat the previous year’s 1.2% net profit increase.
ACLEDA’s efficiency metrics also inched up. The bank benefits from the kind of ratios that are hard to achieve in more developed markets.
As a result, it reported a high ROAE of 13.97%, up from 13.93% the year before, ROAA of 2.26% compared to 2% the previous year and a NIM of 6.02%, up from 5.6%.
BEST INVESTMENT BANK: Yuanta Securities
Since it purchased Tong Yang Securities in 2014, Yuanta Securities has helped to establish a number of significant benchmarks for Cambodia’s fledgling capital markets. One of the most important of all took place in 2020, when ACLEDA Bank became the country’s first bank to list on the CSX.
It was a landmark deal, although sadly the Covid-19 pandemic meant that the deal size had to be stripped right back. Instead, of issuing 5% of its share capital, the bank opted for just 1%, raising KHR70.39 billion ($17.29 million).
The main problem was that many of the individual South Korean and Chinese investors who would have attended the roadshow presentations in person were not able to travel. Likewise, local investors were not able to get to their bank branches because of the country’s lockdown.
However, Yuanta was able to ensure that ACLEDA didn’t have to sacrifice its valuation. The 4.34 million share deal got priced at KHR16,200 per share at the mid-point of its marketed range. This represented about 12 times forward earnings.
Since it began trading in late May, the share price has stayed fairly stable, trading around the KHR16,600 range one year later when ACLEDA Bank released its first quarter earnings.
There are now roughly a dozen stock and bonds listing on the CSX, setting the exchange up for the next stage of its development.
CHINA
DOMESTIC
BEST BANK: ICBC
ICBC shows that it’s not just a case that big is beautiful but also beneficial. The world’s banks and their lending practises are often the cause of economic downturns. But in the case of the Covid-19 pandemic, they provided a source of stability and a lifeline for hard-hit businesses across the globe.
As the world’s largest and most profitable bank, ICBC was right at the forefront of this in China. It postponed payments on Rmb1.5 trillion ($232 billion) worth of loans during 2020, for example.
It is also helping to lead the domestic financial system’s efforts to spur a green revolution. During 2020, it bolstered its green credentials by expanding its loan book to Rmb1.85 trillion.
Amid disruption at home and abroad, ICBC’s management leveraged the bank’s loyal customer base, diversified business structure, market competitiveness and innovation capabilities to survive and thrive. As a result, it made progress across the business while improving operations, ultimately achieving hard-won growth.
The group recorded Rmb317.7 billion in net profit in 2020, representing an increase of 1.4% from the previous year. There was a strong bounce-back in the fourth quarter after a difficult first half for the entire Chinese banking system.
ICBC also recorded a stable NPL ratio, at 1.58% at the end of the fourth quarter. This was a pretty remarkable achievement in the circumstances.
It did represent a slight reversal from four years of consecutive declines since 2016. However, much of the small uptick from the 1.43% recorded at the end of 2019 was due to stricter NPL recognition.
This means that ICBC’s asset quality remains incredibly sound, enhancing the bank’s reputation for prudence and providing a strong platform for 2021’s economic rebound.
ICBC’s investment and financing volumes were also impressive during the awards period. It registered new domestic loans of Rmb1.88 trillion, some Rmb549.1 billion more than the previous year.
What enhances ICBC’s hold on this award is the way that it is now balancing retail with its ever-strong corporate banking division. The bank is now at an advanced stage in the transformation of its retail operations.
Pre-tax profits from this division have risen from 33.5% in 2015 to 44.5% in 2020. Its personal customer base has reached 680 million, with monthly active internet banking users breaching 100 million.
One of the reasons why ICBC has made such inroads is because it is also technologically adept and has a well-integrated fintech strategy. At the end of 2020, this division employed 8.1% of its staff.
During the course of the financial year, the bank invested 2.7% of its revenues to enhance the fintech division, which sits under a framework covering “one department, three centres, one subsidiary and one research institute”.
ICBC has also been developing digital supply chain financing, so that more micro-, small- and medium-sized enterprises can benefit from premier financial services. Loans to private enterprises and inclusive loans rose by 12.4% and 58%, respectively, during the course of the financial year.
BEST INVESTMENT BANK, BEST ECM HOUSE: CICC
As always, the investment banking and ECM award was a two-horse race between Citic and CICC. It is always so close that both houses are typically on all the same landmark deals together particularly on the M&A side.
This year was no different. Dealogic data shows that during the current awards period, CICC and Citic both acted on eight of the top 10 domestic M&A deals.
There were two exceptions: the privatisation of 58.com in seventh spot, which neither was on; and the re-organisation of the Haier group, which came in sixth. CICC was a financial advisor to the home appliances group, crafting a particularly innovative solution for a re-organisation that spanned three listing jurisdictions (Shanghai, Hong Kong and Frankfurt) and a complex process involving a sware swap merger via a scheme of arrangement.
So for yet another year, CICC continues to be an active and influential leader across the Chinese investment banking landscape. According to Dealogic data, it was an advisor on 92 domestic deals with a total transaction value of $202.8 billion. This gave it a 34.84% market share.
The largest transaction of all was for newly formed PipeChina. The state-owned group’s acquisition of oil and gas pipeline assets heralded a key step in the reform of the network, opening market access to small, non-state-owned oil and gas producers and distributors.
In ECM, there was more water between CICC and Citic when it came to the largest deals of the year. The former led some notably symbolic transactions, especially those on the STAR Board, which in two short years has become a serious challenger to the Nasdaq in terms of new listing volumes in the tech space.
Many wondered whether Shanghai’s tech board would take off, but its market cap has doubled in the space of a year and now surpasses Rmb4 trillion. CICC was one of the leads on the largest and most noteworthy transaction of all: the Rmb53.2 billion ($7.6 billion) secondary listing of SMIC.
SMIC is the fulcrum around which China aims to become self-sufficient in semiconductors, which in turn lies at the crux of Sino-US geopolitics. Who would have thought that the foundry’s efforts to master the 14nm process node would dominate the news headlines, but SMIC’s ability to do so will determine whether China can stay the forefront of the 5G race.
CICC is very strong in the tech sector and it was also the financial advisor for battery company BYD, which has set up its own semiconductor arm. The securities house led its Series A funding, which raised Rmb2.7 billion from a group of investors led by Sequoia according to S&P Global Market Intelligence data.
It was also the lead on one of the market’s largest follow-ons of the awards period, an Rmb19.7 billion placement for CATL in the summer of 2020.
One of CICC’s standout achievements was how it dominated the league tables across all equity structures: IPOs, follow-ons and convertibles. There were, for example, a number of large equity-linked deals last year and CICC led two of them for China Southern and Bank of Hangzhou.
BEST DCM HOUSE: Citic Securities
Citic Securities was not only top of the Dealogic league tables for yet another year running, but also increased the gap over second-placed China Securities.
The data provider accords Citic a 9.42% market share for the awards period, a 2.32 percentage point lead over China Securities. According to the securities house’s own data, Citic underwrote Rmb1.3 trillion ($201 billion) worth of bonds in 2020 and RMB269 billion in the first quarter of 2021.
The Chinese bond market is constantly evolving and Citic is always at the helm of new structures that help it to further deepen and broaden.
Perhaps the most notable one during the awards period was an Rmb500 million, 4.8% convertible perpetual bond for Ningbo Commerce bank. Citic Securities was sole lead underwriter of the additional Tier 1 capital offering, which can be converted into equity without notice if the lender hits financial distress.
The undated deal was the first of its kind in the market and set an important benchmark. It provides a new source of funding for smaller commercial and regional banks, which desperately need to bolster capital that has been hit by double whammy of Covid-19 and previous fast credit growth.
Citic’s deal for Ningbo Commcerce Bank in January 2021, paved the way for a second one, a month later, for Zhejiang Chouzhou Commercial Bank.
Another prominent Citic deal during the awards period was Wumei Technology’s Rmb300 million anti-epidemic bond. The 3.75% four-year non-call two-year bond achieved a record-low coupon rate for the issuer.
The securities house is also a prominent advocate for green financing. One standout was China Energy Investment Corporation’s carbon neutral green bond, the first and largest of its type in the country.
Such high-profile deals highlight Citic’s ability to tap into its network to help issuers optimise their funding structures and diversify their investor base.
BEST BROKER: CICC
In addition to winning two awards for its investment banking and ECM capabilities, CICC has also won recognition for its domestic brokerage business.
Since it was established in 1995 as the first joint venture investment bank in China, CICC has developed a top-tier client base of institutional investors that it has held onto for many years despite more intense competition. This continued during the awards period.
In 2020, the firm’s revenue grew significantly from a year earlier, outperforming the overall market. It also worked hard to achieve a more diversified source of revenue from overseas trading activities.
Its strength in broking is a corollary of its ECM dominance and leading role executing the market’s most notable deals. The SMIC IPO on Shanghai’s STAR market was a good example of CICC’s distribution prowess. The firm acted as the joint sponsor and joint underwriter of the first A-share IPO of an overseas-listed red chip company, the largest A-share IPO ever in the semiconductor sector, and the largest A-share IPO in nearly a decade.
One of CICC’s greatest attributes stems from the quality of its research. This has been strong for many years both in terms of the number of companies it covers and the way that it covers them. It is up there with the best international houses in terms of content, look and feel.
Its output has also increased over the past couple of years. Whereas two years ago, it was publishing research on about eight to 10 companies a day, this is now frequently double that rate.
Its daily research spans economics, market strategy and companies with a very clear explanation about why it has set a certain target price. This goes beyond short-term balance sheet analysis to examine long-term strategic and geopolitical drivers.
Good examples include its research on three companies that it currently favours. One is China Tower. CICC has an outperform rating driven by 5G construction growth.
It also has an outperform rating on JS Global on the basis that China is creating a number of world beating home appliance brands and one on Goertek, which it also thinks will become a world-leader in electronic components.
BEST PRIVATE BANK: CMB Private Banking
How long will it be before a Chinese private bank becomes one of the top 10 globally? The answer is not very long at all if CMB Private Banking continues its present growth trajectory.
During the 2020 Financial Year, it registered a phenomenal 24.36% growth in private banking AUM to Rmb2.77 trillion ($428.5 billion). This means that it just squeezed past France’s BNP Paribas on €390 billion ($423 billion) and is closing in on Switzerland’s Julius Baer, which ended 2020 on SFr434 billion ($470 billion).
Next year, it could well hit the global super league for the first time. If it does, it will represent a pivotal moment in terms of Asia’s rising wealth and for those who say the 21st century belongs to China.
In 2020, the growth rate in CMB Private Banking’s customers and AUM both hit a three-year high.
By the end of the year, it had almost attained 100,000 private banking clients (99,977), representing a 22.41% increase compared with 12 months earlier. These clients were also holding more money, with assets per account rising Rmb436,100 to Rmb27.75 million.
CMB Private Banking prioritises digitalisation and customer experience to attract and retain target customers. It has a 24-hour remote calling service centre and in 2020 started overlaying a fintech strategy: putting its Family Trust service up in the cloud and implementing blockchain.
The firm has continued to pioneer new services, including family wealth planning. It has shortened the timeframe for setting up a family trust from two months to two weeks.
Unsurprisingly, it has a very strong 25.7% market share in this segment, bolstered by its annual China Family Trust report. During 2020, it also registered a 100% increase in its number of family trust and discretionary accounts services.
Private banking and wealth management overall is the key reason why China Merchants Bank is trading at such a high equity premium to its peers domestically. It is still not the largest bank in terms of market cap (that’s ICBC). However, when it comes to price-to-book, it is almost four times higher than China’s tier 1 banks, with a valuation of 4.34 times at the end of the first half.
BEST LAW FIRM: Han Kun
A fully integrated law firm with a national presence, Han Kun has been widely recognised as a leader in complex cross-border and capital markets transactions. It has a strong market share in the tech sector and given that the latter continued to boom throughout 2020, it should, therefore, be no surprise to see that Han Kun has come out on top again.
The law firm’s practice areas span the full gamut of private equity, M&A, international and domestic capital markets, investment funds, asset management, antitrust/competition, banking and finance, aviation finance, foreign direct investment, compliance, private client/wealth management, intellectual property and dispute resolution. It delivers this via nearly 500 professionals located in four offices in Beijing, Shanghai, Shenzhen and Hong Kong.
It is especially strong offshore and was a notable presence on many of the most landmark deals in both Hong Kong and New York. This included two of FinanceAsia’s top deals in the 2020 Achievement Awards.
One was the HK$34.56 billion ($4.46 billion) secondary listing of JD.com in Hong Kong, which won FinanceAsia’s overall Equity Deal of the year. Han Kun acted as PRC legal counsel to the joint sponsors.
It acted in the same capacity for the Hong Kong IPO of sister company JD Health International in December 2020.
The true measure of any law firm is how much repeat business it gets. Han Kun demonstrated that it is a trusted partner time and again in 2020.
Notably, there was a spate of New York listings where it acted as the issuer’s legal counsel for both an IPO and subsequent follow-on.
This included Li Auto, which raised $1.09 billion from a Nasdaq flotation in July 2020 and then promptly returned to the market in December to take advantage of the incredible momentum propelling the electric vehicle (EV) sector. The second time round it raised $1.36 billion.
Han Kun also acted for fellow EV start-up NIO when it raised $2.65 billion from a follow-on deal.
The second transaction that Han Kun worked on and won FinanceAsia’s Private Equity Deal the year during the 2020 Achievement Awards was the $9.68 billion take-private of 58.com. Han Kun represented the online ads company, which secured a group of private equity investors to help it to delist from the Nasdaq.
On the DCM side, Han Kun was also an active presence particularly for Tencent, one of its marquee clients. It was behind debt offerings for the parent and Tencent Music. Other prominent debt deals included transactions for Baidu and Meituan.
BEST DOMESTIC RATING AGENCY: China Lianhe Credit Rating Company
China Lianhe Credit Rating Company (Lianhe Ratings) again impressed during the awards period providing a comprehensive credit ratings service in both the interbank and exchange bond markets.
Although the firm’s market share kept it in second spot in the domestic ratings market in 2020, it closed the gap on the leader in the first quarter of 2021.
More specifically, in 2020 Lianhe Ratings was mandated with 2,090 issue ratings, maintaining the second largest market share of roughly 30%. This was 1.25 percentage points higher compared with the previous year.
Also in 2020, the firm issued 4,671 initial rating reports and 2,691 surveillance rating reports. Notably, in relation to default risks, the time from Lianhe Ratings’ first warning to default averaged 226 days, outperforming the market average of 192 days.
This last fact is the key to why Lianhe has won this year. It was the only major domestic ratings agency that was not penalised by regulators for conflicts of interests or breaches in codes of conduct.
China’s credit rating industry is still in the early stages of development. The agencies have been around for a number of decades in one guise or other, but their need to evaluate credit risk is only about six years old.
Hence, it was not surprising that a wave of defaults caught a number of them off-guarded in the second half of 2020. One was suspended for three months for failing to spot problems at Yongcheng Coal, which defaulted carrying a triple-A rating.
Lianhe came through on the other side with its reputation intact. The firm has also contributed to industry development by enhancing the transparency of its rating methodologies.
As of March 2021, for example, the firm had released 65 rating methodologies, covering all debt financing instruments and industries in the interbank and exchange bond markets.
In terms of research, Lianhe Ratings released 378 reports in 2020 with a total word count of nearly 4 million. In Q1 2021, it released 63 reports.
INTERNATIONAL
BEST BANK: HSBC
It is China’s largest foreign bank on multiple fronts and HSBC intends it to stay that way despite facing headwinds on other ones, alongside many peers.
It continued growing its asset base during the course of the 2020 Financial Year, with S&P Global Market Intelligence data recording a 7.8% rise to Rmb565.8 billion ($86.7 billion). HSBC’s comprehensive business among international banks is evident via its 160 or so outlets across more than 50 cities.
It wins recognition for its determined effort to continue contributing to China’s development by connecting the mainland with the global economy, in tandem with bringing international businesses and investors to the domestic market.
It is advancing the build out of its core digital capabilities to enhance customer experiences and leverage key strengths across wealth, lending and cross border financial services. During the awards period, this included completing an interbank forfaiting transaction on the China Trade Finance Union Blockchain Platform in October 2020. This represented the first of its kind by a foreign bank in mainland China.
On the investment banking side, HSBC is generally less well known for its ECM activities than its DCM ones. But it is in the top five among international banks when it comes to Chinese clients raising equity capital alongside Goldman Sachs, Morgan Stanley and UBS.
During the awards period, it featured on Haitong Securities Rmb20 billion A-share private placement and was second in underwriting commitment to Goldman on Lufax’ $2.69 billion New York IPO.
HSBC’s powerhouse DCM operations enabled it to rank top in the Panda bond market among the international banks, both in terms of deal count and underwriting amount.
In March 2021, for example, it acted as joint lead underwriter and joint bookrunner on a Rmb2 billion five-year Panda bond for the Asian Development Bank (ADB). It was an interesting deal not least because it marked the supranational’s first return to a market that it had originally helped to open, for the first time in 12 years.
HSBC also demonstrated that it remains a trusted partner for the Chinese government thanks to its role on the sovereign’s €4 billion ($4.8 billion) five-, 10- and 15-year Reg S senior unsecured bond offering in November 2020.
The bank stands at the forefront of promoting sustainable finance, establishing an internal Sustainable Financing team to make sure that departments are aligned across the bank. This January, it was particularly busy executing two green bonds on the same day: one deal for Yuzhou Group and one for Zhenro Properties.
The bank’s commitment to China is also reflected through its connection to local communities. Its sustainability efforts during the awards period included more than Rmb104 million in donations to 24 charitable programmes, benefiting more than 609,000 people across disaster relief, financial education, environmental conservation and employability.
Further, as a leader in RMB internationalisation, HSBC facilitated a market-first batch of securities lending transactions under QFII/RQFII, in November 2020, among other key achievements.
HSBC’s investment in private banking is also become more apparent on the mainland where it wants to expand beyond the Tier 1 cities. In 2020, new initiatives included the launch of a first 1-to-1 private fund in association with JinTrust.
BEST INVESTMENT BANK: Goldman Sachs
Goldman Sachs has long been the investment bank of choice for many clients in China and it’s therefore no surprise that it’s come out ahead of a tight pack for yet another year. The firm always generates significant business from top-tier corporates such as State Grid Corporation of China, Haier, Country Garden, Weibo, Ctrip and Pinduoduo.
What helped Goldman to clinch the award over archrival Morgan Stanley this year was its M&A franchise. The US investment bank was the highest rated international bank in Dealogic’s league tables with accredited volume of $79.6 billion spanning 28 deals.
This gave it an 11.79% market share compared to UBS on 9.15% and Morgan Stanley on 6.28%. Key transactions included: Lens Technology’s $1.4 billion acquisition of Catcher’s smartphone casing business; and Cenovus and Husky’s $8.64 billion all-stock merger of equals.
But undoubtedly the highlight, not least in volume terms, was Petrochina’s $49.2 billion sale of its pipeline business to PipeChina. Petrochina is one of Goldman’s longest-standing and most loyal clients.
This deal was an important one for the oil giant and China, as the government sought to improve operational efficiencies by pooling infrastructure assets. It won FinanceAsia’s M&A deal of the year in the 2020 Achievement Awards.
In ECM, Goldman Sachs demonstrated its capabilities in the domestic market through several key transactions during the awards period. This activity is set to increase further after it gained permission to take over its domestic securities joint venture Goldman Sachs Gao Hua last year.
Domestic deals included: Oriental Yuhong’s Rmb8 billion A-share private placement (a notably large follow-on in the industrial sector) and Lens Tech’s Rmb15 billion private placement (the largest A-share follow-on in the TMT sector since 2018).
But what put Goldman ahead of Morgan Stanley, which had SMIC’s record-breaking A-share IPO to its name, was its ECM roll call in the US. Geopolitics has yet to dampen enthusiasm for New York listings and there were plenty of benchmark deals during the awards period.
The multi-billion dollar deals just kept flowing. Goldman was lead left on both the largest IPO and secondary market deal: the $2.69 billion flotation of fintech giant Lufax and a $4.13 billion follow-on for e-commerce site Pinduoduo, which also raised $2 billion via a convertible on the same day.
Then there was also the flotation of online property group KE Holdings (Beike), which raised $2.4 billion from its IPO in August and almost as much again from a $2.05 billion follow-on in November.
In DCM, meanwhile, the firm was involved in a number of transactions for key clients. These included: Tencent Holdings’ $6 billion multi-tranche senior note issue; ICBC’s offshore Basel III AT1 deal; and Meituan’s $2 billion dual-tranche debut 144A senior unsecured offering.
BEST OFFSHORE RATING AGENCY: Fitch Ratings
Fitch Ratings’ growth and business performance in China has earned it this award.
In particular, it has carved out a role for itself as a preferred rating agency for first-time Chinese issuers. During the awards period, it had a leading market share for first-time cross-border China bond deals.
Importantly, Fitch was able to continue to support its clients despite the pandemic. For example, it quickly shifted from traditional offline events to online conferences to ensure it could keep market participants up-to-date with evolving trends. It complemented this by increasing its Chinese content for investors, including Chinese criteria reports, Mandarin teach-in videos and a new Chinese video series.
This is important to the firm, since it is the first rating agency to have a dedicated investor development department – including an onshore team in China that allowed Fitch to continue to provide a full range of investor services on the ground without any interruptions.
Its focus on providing timely research for investors enabled Fitch to stand out from competitors with signature reports in response to Covid-19. For example, it was the first among peers to publish a Covid-19 exposure assessment and default risks for Chinese corporates, and to clearly explain how ratings would be reviewed to reflect the impact of the pandemic.
Overall, over 1,400 China-related leading market research pieces were published during the awards period, more than 440 of which were in-depth industry papers.
It helps that the firm has the longest track record among its peers, being the first international rating agency to open a representative office in Beijing in 1997. Its strong on-the-ground presence is also reflected in it being the only international agency with a China corporate research team (established in 2013), with six Mandarin-speaking analysts dedicated to in-depth industry research.
HONG KONG
DOMESTIC
BEST BANK, BEST SUSTAINABLE BANK, BEST INVESTMENT BANK, BEST ECM HOUSE, BEST DCM HOUSE, BEST BROKER, BEST PRIVATE BANK: HSBC
If ever proof were needed of just how important Hong Kong is to HSBC’s global franchise, then the bank’s 2020 financials delivered it in spades. The Territory accounted for 93% of the group’s reported profits before tax.
This also represented a massive increase from 2019 when Hong Kong accounted for 54.5% of the group’s adjusted profit before tax. Clearly, Covid-19’s disproportionate impact on certain countries and global trade and investment flows had a huge bearing on this.
Nevertheless, the trend is clear and it reinforces HSBC’s ongoing pivot back to Asia where it all started 156 years ago. During the course of this year’s Country Awards, a number of key announcements were made and measures were put in place underlining the direction the bank is taking.
The most important of all occurred just after we announced our 2021 winners. In early June, HSBC revealed that it is splitting the leadership of its Asian business between two people (David Liao and Surendra Rosha) following the retirement of Peter Wong.
This will draw a clearer distinction between Hong Kong/China where HSBC has already been investing heavily and the rest of Asia, which also shows strong promise and growth. Earlier announcements included the decision to make investments totalling $6 billion in Hong Kong, China and Singapore and the redeployment of $100 billion in risk-weighted assets (RWA) from Europe and the US to Asia.
Another ongoing policy is the creation of better synergies across different businesses within the bank. One of the biggest moves, in this respect, was the creation of the wealth and personal banking division (WPB), which merged retail, wealth management and private banking into a super division with assets of about $1.6 trillion.
This gives HSBC an incredibly strong platform to supercharge its product offerings and leverage its size. Private banking, in particular, goes from strength to strength as it taps into Asia’s growing wealth on the one hand and the succession planning the first generation of entrepreneurs need on the other.
This marks the 13th year in succession that HSBC has won our award for Best Private Bank in Hong Kong: a number that’s unlucky for some, but not for HSBC. The bank reports that Hong Kong accounted for 87% of the division’s profits in 2020, with AUM growing 15%. About half of that AUM growth came from internal referrals, once again emphasising the benefits of cross-divisional co-operation.
This is also flowing far more strongly the other way as well. The private bank has been expanding its stock borrowing and lending business for clients looking to earn an additional fee from their equity holdings.
It is also increasingly helping to underpin the investment bank by originating deals. During the awards period, for example, it was responsible for three marquee transactions covering convertible bonds, block trades and acquisition finance totalling $1.5 billion.
While HSBC management frequently highlight the bank’s Asian focus, this doesn’t detract from its USP: bringing the world to its clients wherever they are, backed by a strong balance sheet and the investment bank expertise wrapped around it.
HSBC’s M&A franchise continues to demonstrate this in action. During the awards period, the bank helped a number of Hong Kong’s top corporates with large and complex cross-border transactions.
In March 2021, for example, it was mandated to advise CK Asset Holdings on its proposed $4.4 billion acquisition of four European infrastructure assets. The same month, it also won an advisory role with Jardine Matheson, which is in the process of simplifying the parent company structure through the acquisition of a 15% stake in Jardine Strategic.
When it comes to the award for Best Investment Bank, one of the standout achievements was the way that HSBC increased its ECM footprint, historically the weakest leg of the stool. In recent years, the bank has built up a strong reputation for executing placements in Hong Kong.
However in 2020, it also broke new ground in the US, a market it has long hoped to break into. Last October, it made new strides after ranking second out of five syndicate banks for its underwriting share of the $2.7 billion IPO for Chinese fintech, Lufax.
Back in Hong Kong, one particularly important transaction was for the territory’s flag carrier, Cathay Pacific. HSBC was a joint underwriter for its $1.5 billion rights issue, the largest rights issue since 2015.
HSBC’s DCM operations remain the jewel in the crown and are developing an emerald green lustre as the bank continues to lead the way in ESG financing. It stands front and centre of Hong Kong borrowers’ evolving sustainability strategies.
There were two especially notable achievements during the awards period. In January 2021, HSBC was the joint structuring advisor for the Hong Kong Government, which set up the world’s first governmental Medium Term Note (MTN) programme dedicated to green bond issuance.
The previous March, HSBC acted as sole sustainability advisor for MTR Corp, which issued a $1.2 billion 10-year green bond, the single largest-ever single trance green bond from Asia.
One of the most notable differences between the 2020 and 2021 Country Awards is the way that ESG has shot to the top of the agenda. It is now not so much about making ESG commitments but delivering them.
The conversation has also shifted from examining the ways that banks can improve their own ESG footprint to how they can measure and then help clients to boost theirs. In October 2020, HSBC announced an ambitious plan to support the transition to a net zero global economy.
This involves $750 million to $1 trillion in financing and investment over the next 10 years. It plans to become net zero in its own operations and supply chain by 2030 or sooner.
During its May 2021 AGM, it also passed a resolution to set, disclose and implement short- and medium-term targets to align its provision of finance with the Paris Agreement goals. It will phase out coal-powered financing in EU and OECD countries by 2030 or sooner and the rest of the world by 2040.
In Hong Kong itself, one of its flagship initiatives has been the Clean Waterways programme that aims to remove plastic waste from the harbour and surrounding waterways using zero-emission, solar-powered boats.
Its ESG remit also includes financial inclusion. One key programme, which also helps the bank to retain its dominant position in Hong Kong’s retail market, is called HSBC One.
This was launched in October 2020 and comprises a newly integrated account that combines no-fee basic banking services with a comprehensive suite of solutions that meet customers’ banking needs. The following month, the bank also eliminated 26 fees and charges across a broad range of categories including general banking, deposit and withdrawal services.
Competition to capture HSBC’s market share comes from two key directions: fintechs and Chinese banks. It has countered by boosting its renminbi-based activities.
Its real-time renminbi payment service called Faster Payment System (FPS) grew strongly in 2020. During the first 11 months of the year, it recorded Rmb1.8 billion in transaction volumes, up 44% year-on-year.
It was a big year for ACLEDA in more ways than one. It became the first bank to list on the Cambodian Securities Exchange (CSX) and it also adopted a new logo for the first time in three decades.
The latter comprises a gold and white pakshi-svarga, or bird of paradise. This denotes sustainability and strength: two qualities the bank hopes will enable it to soar through the coming decade.
BEST LAW FIRM: King & Wood Mallesons
This now makes it a hat trick for King & Wood Mallesons as it wins the award for the third year in a row. As we have written in previous years, the law firm has a unique position among global law firms.
Its growth and success reflects Hong Kong’s unique position straddling China and the outside world. This is what it does very well: helping Chinese companies to expand overseas.
As such it is deeply embedded on the Mainland where 14 of its 29 global locations are all located on the Mainland. Many firms, whatever their business, are finding it tough to walk an increasingly fraught geopolitical tightrope between China and many Western countries.
King & Wood does not have this problem because a lot of its business is very Hong Kong centric. In 2020, it acted on 23 out of 146 Hong Kong IPOs for example.
One particular standout was the HK$16.35 billion A and H share rights issue for China Merchants Securities. This represented the first such offering by a PRC-listed securities firm.
King & Wood acted as issuer counsel, not only advising on the right approach for the repurchase of China Merchants A shares, but how to use the proceeds to establish an Employee Stock Ownership Plan (ESOP).
On the DCM front, the law firm’s standout transaction was probably Industrial Bank’s $450 million blue bond. King & Wood acted as issuer counsel for one of China’s most ESG-centric banks.
Finally, where M&A is concerned, King & Wood showcased its expertise across multiple jurisdictions when it acted as issuer counsel for the $6.8 billion re-organisation of Haier Smart Home, which encompassed a major asset re-organisation creating an A, D and H listing model spanning, China, Germany and Hong Kong.
INTERNATIONAL
BEST BANK: Citi
Citi has been a longstanding recipient of this award and that seems unlikely to change in the future given the bank’s new strategic direction.
It may be pulling out of most of the region’s retail banking markets, but it is doubling down on its hubs in Hong Kong and Singapore. The bank plans to hire hundreds more staff members in Hong Kong for its wealth management franchise, for example.
Hong Kong is especially important to Citi. It is not only the largest revenue generator in the region, but the fourth largest globally after the US, UK and Mexico.
It also continued to perform throughout the pandemic with loans and deposits growing 2% and 14% respectively during 2020. In 2020, the consumer banking business saw a 12% increase in the number of new-to-bank clients, a 44% rise in net new money inflows and a 9% grow in wealth management revenues.
Since Citi launched its first application programming interface (API) partnership in 2018, the bank has also continued to expand its digital ecosystem. At the end of the awards period, it had 26 API-powered initiatives with 22 merchants covering dining, shopping, entertainment, travel and personal finance.
Citi is always a strong contender for Best Investment Bank in Hong Kong and has decades-long relationships with the Territory’s leading corporates. Unlike some of its peers, it is equally strong across M&A, ECM and DCM. It has also spearheaded sustainable financing too.
On the M&A front, it advised Kerry Holdings on the $3.93 billion sale of a 51.8% stake in Kerry Logistics to SF Express and the privatization of Li & Fung.
In terms of DCM, it was active across many deals. One of the most notable was Bank of China Macau’s CNH3 billion ($460 million) blue bond - the first international capital markets blue bond issue by a borrower from Asia Pacific.
Its ECM roster was as busy as ever. The bank had lead roles on Baidu’s Hong Kong secondary listing, Yum China’s secondary listing and Nongfu Spring’s IPO.
BEST INVESTMENT BANK: Morgan Stanley
This is always one of the most hotly contested awards given that it not only embraces the activity of Hong Kong’s corporates, but the listing of Chinese companies on the Territory’s stock exchange too.
Morgan Stanley has a turbo-charged ECM business that stands front and centre of every single new equity-raising trend. It was this, which propelled the bank to winning FinanceAsia’s Investment Bank of the Year for our 2020 Achievement Awards last December as well.
The single largest IPO during our awards period was Kuaishou Technology’s $6.23 billion equivalent offering. Morgan Stanley was joint sponsor of the deal, which was priced at HK$115 per share in late January. As of mid-July, it still commanded a 25% premium to its IPO price after a volatile secondary market ride following the announcement of its first quarter results.
Morgan Stanley also has an enviable repeat business. One of its best clients over the past few years has been WuXi Biologics. During the first three months of 2021 alone, it executed a $1.3 billion placement in January and a $1.7 billion follow-on in early February.
One of its most grateful clients was almost certainly Cathay Pacific, which like most airlines was forced to re-capitalise in order to survive Covid-19. Morgan Stanley was the sole financial advisor for the flag carrier’s HK$11.7 billion ($1.5 billion) rights issue, with 50% of the economics.
Its biggest M&A transaction was for one of Hong Kong’s most active cross-border corporates: CK Hutchison. The US investment bank was mandated as the lead financial advisor on the €10 billion ($11.78 billion) sale of its European tower companies to Cellnex, the continent's largest ever telecommunications infrastructure deal.
When it comes to DCM, Morgan Stanley does not go after the flow business that some of its rivals do. What it is very good at is cherry picking complex transactions to showcase its expertise and enhance its wallet share.
Its landmark 2020 deal also won FinanceAsia’s Bond Deal of Year in our Achievement Awards. This was AIA’s inaugural $1.75 billion 20-year subordinated note, the first to quality as Tier 2 capital under Hong Kong’s new regulatory framework for the insurance industry.
HONG KONG (CHINESE FINANCIAL INSTITUTIONS)
BEST BANK: Bank of China (Hong Kong)
The core business of Bank of China (Hong Kong) (BOCHK) outperformed the market in 2020, with prudent risk management leading to steady growth in major businesses and enhanced regional synergies.
By the end of last year, total assets had increased by 9.7% to HK$3.3 trillion ($427.8 billion) from a year earlier. Total deposits from customers and total advances to customers grew to HK$2.2 trillion and HK$1.5 trillion, respectively, up 8.7% and 7.3%, outpacing the corresponding average market growth rates.
This also marked a reversal on 2019, when loans grew 10.2% and deposits 5.9%. It was hardly surprising that loans declined during the pandemic and indeed, BOCHK’s priority was to enable its clients to ride out the pandemic.
But the uptick in deposit growth showed that, in difficult times, people flock to the soundest banks. BOCHK was a big beneficiary of this.
The bank ended the year with a healthy liquidity position despite the fact that the pandemic and falling market interest rates impacted net operating income and net profit. In addition, BOCHK strengthened cost management and ensured ongoing investment in its strategic priorities.
At the same time, by capturing opportunities brought about by Hong Kong's development as an asset and wealth management centre for Asia, BOCHK’s mid- to high-end personal banking customers number witnessed double-digit growth.
The bank also recorded other notable achievements: the top market share in terms of the number of new mortgages; the top mandated arranger in the Hong Kong and Macao syndicated loan markets for yet another year; and market leadership in the cash pooling business.
Further, BOCHK remained committed to fulfilling its social responsibilities, putting green and sustainable development into practice. For example, it launched the first phase of a green deposit scheme and grew its green loans by over 60%.
To further its digitalisation and technology-driven transformation, BOCHK has continued to upgrade its personal account opening service, payment, wealth management and cross-border functions of its mobile banking. Its number of mobile banking customers grew by nearly 30%, while those of BoC Pay and BoC Bill customers both surged by about 80%.
BEST INVESTMENT BANK: CICC
CICC retains its hold over this award for another year. It has its competitors but none of them are as dominant across the board in M&A, ECM and DCM.
The securities house has a particularly strong cross-border M&A platform and a diversified client base, making it a consistent leader in overseas markets. Nowhere was this more evident than its work for Haier, which spanned CICC’s M&A and ECM divisions across three geographies: China, Hong Kong and Germany.
CICC was a financial advisor for the home appliances group as it privatised Haier Electronics, then re-listed the new entity, which it was merged with – Haier Smart Home – on the same day.
It also advised Alibaba’s Taobao group in the expansion of its offline empire, when it advised on the $5.02 billion equivalent takeover of Chinese hypermarket operator Sun Art Retail. The deal comprised the acquisition of a 36.2% stake in the Hong Kong-listed entity and then a tender offer to take out the remaining 22.04% share it didn’t own.
When it comes to ECM, it was pretty much neck-and-neck between CICC and Citic CLSA. They were both on landmark deals spanning Hong Kong, New York and, for the first time in some time, London.
One big ongoing theme is for New York-listed Chinese companies to hedge their geopolitical bets by securing a secondary listing back home in either Hong Kong or China. CICC was joint sponsor, alongside Credit Suisse and JPMorgan, for NetEase’s Hong Kong secondary market listing, which raised $3.13 billion equivalent after the exercise of the greenshoe.
It was also at the forefront of three hot sectors: biotech, where it acted as a joint sponsor on Hangzhou Tigermed’s Hong Kong IPO; electric vehicles, where it participated in deals for NIO and Li Auto; and consumer, where it was a joint sponsor for Nongfu Spring’s Hong Kong IPO.
CICC has also gained momentum in the overseas bond markets. During the awards period, for example, it was joint bookrunner on Alibaba’s $5 billion SEC-registered senior unsecured fixed-rate bond.
The deal was the largest SEC-registered bond offering by a Chinese enterprise since 2018 and the first international sustainability bond in the Chinese TMT sector.
BEST ECM HOUSE: Citic CLSA
This was a hard-fought award, with Citic CLSA fighting off strong competition from CICC and Haitong. The latter has noticeable momentum on its side after securing sponsor roles on some of Hong Kong’s largest offerings, including the IPO of JD Health International.
However, when it came to the crunch, it was CICC and Citic CLSA, which had the broadest geographical diversity across Hong Kong, New York and London.
Trying to choose between them was like splitting hairs. One thing that stood in Citic CLSA’s favour was its role as joint sponsor on FinanceAsia’s Equity Deal of the year during the 2020 Achievement Awards: the HK$34.56 billion ($4.46 billion) Hong Kong secondary market listing of JD.com.
But this deal was just the cherry on a very large cake. Citic CLSA was also either the sponsor or joint sponsor of: Baidu’s secondary listing (the first AI company to be listed in Hong Kong); the IPO of Evergrande Services (the largest flotation by transaction size in the real estate sector over the past six years); and Tigermed’s Hong Kong IPO, which achieved the lowest discount of A-share to H-share since 2015.
Over in New York, the Chinese securities houses are now playing a far more prominent role. They started off using their corporate relationships to secure co-manager slots and during the awards period, Citic CLSA had just such a role on the $2.44 billion listing of KE Holdings (Beike), China’s largest online real estate listing and transactions platform.
But it also managed to upgrade itself to co-lead for the $2.69 billion IPO of fintech Lufax, the largest New York listing during the awards period.
Then in London there were a clutch of IPOs through the newly formed London Stock Connect Scheme. Citic CLSA was at the forefront of one of them: the $1.83 billion listing of China Yangtze Power.
The Chinese houses are now becoming embedded in the international equity markets outside of Hong Kong. Citic Securities always hoped that its acquisition of CLSA would enable it to do this.
In 2020, it became very clear that this started to really pay off. It also put itself ahead of the competition by executing a deal in India: a $150 million convertible for Indiabulls Housing Finance.
BEST DCM HOUSE: BOCI
BOCI is one-of-a-kind among Chinese investment banks. It is far advanced in terms of its international expansion and every year those capabilities are becoming ever clearer.
The investment bank provides a true barometer of where China is expanding its geopolitical reach and that was particularly evident during our latest awards period when BOCI executed deals for Pakistan and Saudi Arabian oil giant Aramco.
Right at the very end of the awards period, BOCI was a bookrunner on a $2.5 billion bond for the Islamic Republic. The three-tranche deal marked the country’s first international bond offering since 2017.
It was also an important benchmark since it enabled the B-/B-/B3-rated sovereign to term out its debt by adding its first 30-year tranche since 2006 as well.
Pakistan’s transaction was well timed, coinciding with a bull run on the stock market and currency outperformance. This backdrop helped the bond to perform in the secondary market. The 30-year tranche was up five points in about three months.
BOCI’s other notable deal was an $8 billion offering for Aramco. The bank’s London branch secured a junior role on the single-A rated credit’s international bond debut in 2019. In late 2020, BOCI upgraded that to full bookrunner status.
Success is founded on a unique calling card. BOCI can tap pockets of Chinese demand that international competitors find hard to match. That investor diversification is always helpful for borrowers in optimising price tension.
When it comes to Chinese borrowers issuing offshore, BOCI continues to hold a lead, not only over other Chinese competitors but international ones too. Dealogic data shows that the bank as a whole led 191 transactions raising $13 billion during the awards period.
It is particularly strong in the investment grade space thanks to its longstanding relationships with the country’s SOEs such as ChemChina, which issued a $2.985 billion equivalent deal in dollars and euros.
However, the standout bond was one it issued in its own name. Self-led deals do not usually gain a mention, but in September, the bank delivered a CNH3 billion ($460 million) and $500 million blue bond. This marked only the world’s fourth-ever deal following a handful of transactions by sovereigns and supranational agencies.
It provided an important template for other Chinese banks. It also helped the group to secure ESG issuer of the year during our 2020 Achievement Awards.
BEST BROKER: Haitong International
The firm continues to impress in this category, with another year of strong growth in both the retail and institutional client segments. Indeed, broking was Haitong International’s best performing division in terms percentage growth during the 2020 Financial Year.
The division’s revenues rose 35% to HK$1.18 billion ($151 million). By comparison, corporate finance was up 19% to HK$1.3 billion, while trading was flat at HK$3 billion and leveraged/acquisition finance was down 18% to HK$1.4 billion.
One of the reasons why the brokerage division is doing so well is because Haitong International is now incredibly well positioned in ECM. During the 2020 calendar year, it participated in 51 Hong Kong IPOs and had a sponsor’s role on 13.
Overall, Haitong International saw 39% year-on-year growth for total brokerage commission income – split between 37% in the institutional space and 40% for wealth management.
The performance in the latter was especially noteworthy. Since 2020, the firm has been strategically evolving and expanding its business. One key goal has been to give it more defined positioning to ramp up its offering for entrepreneurial clients across wealth planning advisory as well as investment and financing solutions.
For its institutional clients, meanwhile, its trading coverage is across more than 10 major global markets. It now covers nearly 2,000 stocks across Greater China, Japan, India, South Korea and other regions – the number of rated stocks nearly doubled during last year.
The firm also adapted quickly to Covid-19. As investors looked for more options to diversify their portfolio risks, Haitong International adjusted its product issuance strategy and aggressively expanded its coverage. By the end of February 2021, its Hong Kong warrants products covered 170 underlying assets – over 77% more than the industry average of 96.
Overall in 2020, the firm’s warrants trades by volume and number hit HK$462.2 billion and 8.65 billion, respectively. This placed it fourth overall in the Hong Kong market and first among all Chinese financial institution issuers.
Another milestone for Haitong International in 2020 came from its focus on ESG; the firm published its first ESG statement to pledge for carbon neutrality by the end of 2025.
BEST PRIVATE BANK: CMB Private Banking
It is another double hatter for CMB Private Banking, which once again wins the award in Hong Kong as well as China.
The two are intimately connected, although Hong Kong remains a booking centre where it is operating through three wholly-owned entities: Wing Lung Bank, China Merchants Bank Hong Kong and China Merchants Bank International.
As of end 2020, AUM stood at $42.7 billion. This accounted for about 10% of the total AUM of the entire group’s private banking business.
That represented a slight drop compared to the 12% ratio it hit in 2019. However, it was not very surprising given just how high AUM rocketed on the mainland (up 24.36% year-on-year).
One ratio that CMB Private Banking is particularly proud of is its cost-to-income ratio. Last year, it remained at a relatively low level, at under 20%.
CMB Private Banking made significant advances in expanding and innovating its product platform for the overseas market.
For example, in 2020 it selected certain external fund houses to help its clients pursue a low volatility strategy and provide products with low correlation to the domestic Chinese market. This included Reits, CLOs and US dollar bonds.
The bank also enhanced its digital overseas product platform last year. This covers bonds, funds and structured products.
In terms of discretionary investments, the bank made a pioneering move back in 2019 when it became the first Chinese financial institution to launch a Luxembourg SIF fund attract many investors. This specialised investment fund prioritises investments, with a high-risk/high-return profile and niche opportunities.
BEST OFFSHORE RATING AGENCY: Lianhe Ratings Global
Backed by the leading market position and strong support of its parent company in China, Lianhe Ratings Global has been able to leverage an abundance of analytical data and market intelligence on its journey to becoming a China credit expert in the offshore markets.
This has helped it develop robust criteria and best-in-class China focused research – creating a differentiated and transparent methodology that incorporates a local ‘China insider’ perspective.
During the awards period, the firm published solicited ratings on 29 US dollar-denominated bond deals and $6.24 billion worth of issuance. The big sector, unsurprisingly, was property, which comprised 25 of the total, giving Lianhe a 13% market share.
Lianhe Ratings Global’s investor coverage extends to roughly 7,000 Chinese offshore bond investors based in the Asia Pacific region. They receive rating reports, non-rating commentaries and market updates on a regular basis.
To get close to the market, the firm also conducted an investor survey regarding the US dollar-denominated Chinese offshore bond market, interviewing 26 individuals to publish the findings in February 2021.
It also conducted a number of events including a China property conference in association with data provider, Wind, plus a 2021 property sector outlook alongside Haitong International.
It is no surprise that the firm operates in line with international best practice; around 55% of its staff previously worked at the big three international credit rating agencies.
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