Day 3 FinanceAsia Achievement Awards - commercial banking and investor services
Best Trade Finance Bank
HSBC's commitment to the trade finance business in times of adversity keeps its customers happy. In a year marked by political instability in many Asian countries, HSBC has continued to serve its trade clients, opening and confirming letters of credit (LC), extending import facilities, and swiftly negotiating documents. This dedication has not gone unnoticed. In a poll of importers and exporters conducted by FinanceAsia to help us determine the winner of this award, customers consistently praised HSBC for its reasonable pricing, global reach, its professional approach to problem solving and its reliable technology.
We asked over 600 corporates to participate in our poll, and in the event 119 did. HSBC topped the poll with 36% voting for it as their preferred trade finance bank.
As one multinational importer put it, "HSBC is very fast to respond to new trade enquires. When we look at new ways to deal with our overseas suppliers, HSBC gives us prompt verbal responses and always follows up with a solution."
Another customer commented on the bank's trade advisory strengths. "When we go to deal in countries that are unfamiliar to us, HSBC gives us a lot of information about trading risks and about the companies that we intend to do business with. The bank provides us with quality advice on how to secure payments."
These glowing testimonials are backed by strong numbers and an unbeatable market presence. HSBC's LC issuing program, TradeSolutions, turned over 24,000 LCs and 59,000 bills with a value of $4.51 billion dollars between January and September this year. According to SWIFT statistics, the bank has the biggest pan-Asian market share of all of its competitors, controlling 7% of all trade transactions in the region. These transactions are managed out of 382 branches in every country in Asia.
But while these numbers are impressive, it is the bank's commitment to tough markets in tough times that sticks out in the minds of its customers. A fact put eloquently by one poll respondent, "After the nuclear tests in Pakistan, HSBC was one of only two banks that was opening LCs and confirming them. This in the face of severe adversity and poor dollar supply. We appreciated this gesture and our relationship has been solid since."
It is for these reasons that HSBC again deserves the title of best trade finance bank.
Best Cash Management Bank
If the best cash management bank should be judged on service consistency, network penetration, technological excellence and a superior relationship management ethos, Citibank delivers on its promises and wins hands down. The bank's clients, large and small, benefit from its embedded bank strategy which gives them access to payables and receivables clearing services in 14 countries through over 1,000 clearing centres.
FinanceAsia selected the best cash management bank this year based on the most exhaustive poll of cash management clients ever conducted by a magazine. We emailed our questionnaire to over 4000 of Asia's biggest cash management clients, and we received 438 votes. Citi received a commanding 52% of the votes for preferred cash management bank.
This year the bank picked up 22 mandates from multinational and local clients. Those clients we polled for this award consistently praised the bank for understanding their specific needs and being willing to offer customized solutions to difficult problems.
"Some banks have thousands of rules and regulations which are too rigid and, at times, ridiculous. Citibank offers a fast and flexible service that is always professional," commented one customer.
There were also many comments about the quality of the bank's relationship managers, such as this: "Citibank's relationship managers are very supportive and efficient. We feel comfortable communicating with them at any time, even after hours when banking problems arise with our operations in overseas countries."
A pioneer of the concept of cash management in many of Asia's emerging markets, Citibank is no longer considered a foreignerÆs bank. It continues to win over sizable domestic clients who see the benefits in tapping into the bank's global expertise, its ceaseless investment in technology and its whopping balance sheet. Just recently it was the first international bank to be appointed as the primary funds collection bank for LG H&H, one of Korea's largest chaebol, replacing several local banks.
In 2001 the bank has made big strides in its efforts to make the cash management function as automated as possible - a commitment mirrored in an unofficial rebranding of its cash services division which it now calls E-business. This year's launch of CitiDirect and Citibusiness.Direct in key Asian markets gives customers the ability to initiate transactions and check their account status on-line.
The online platforms are integrated with Citibank's other transactional banking services including trade finance, secuirites and foreign exchange providing a seamless experience for its corporate clients. The bank expects to have 1,300 customers using the online service by the end of the year.
"When you run a global business, time is essential. Citibank's cash management systems make sure I don't waste any of it," sums up one customer.
Best Foreign Exchange House
Our forex award this year goes to Citibank, which was the favoured choice of clients in our FX poll.
Each of the major FX houses was asked to name the most sophisticated clients, and a total of around 1033 names was received. Our poll went out by email and we received 155 responses in a two week period.
The results showed that 36% saw Citi as their most active counterparty bank. Indeed, Citi topped the ranking in all questions. It gained 40% of the votes for offering the best price in all market situations. And even when Citi didn't give the best price, 23% said Citi gave the second best price in all market situations (which again, was the highest score).
In the immensely competitive world of Asian FX (indeed, HSBC and Deutsche also did well in the poll), it is a mark of Citi's determination and skill that the top clients chose it this year. However, as Citi well knows, no firm can afford to be complacent in FX. It will no doubt accept this award, and realize that resting on its laurels is the last thing it can do.
Best Global Custodian
The reappearance of the JPMorgan name on the global custody stage startled many of its sizable competitors and has made them realize that now is not the time for complacency. With the old Chase business being rebranded as JPMorgan following the merger of the two entities, the bank has worked hard to persuade its list of international institutional clients that it is the best global custodian in emerging Asia. And its efforts have paid off. JPMorgan's consistent commitment to providing fund managers and plan sponsors with cutting-edge solutions to their asset safe keeping needs makes it the number one player in the market. The awesome clout of its top-tier clients like Templeton, Fidelity and Vanguard and the sheer number of cross border assets that it handles are proof enough of its capabilities.
The bank's focus in the past 12 months has been to branch out from its core competencies in custody to offer fund administration, record keeping and master custody services. This new focus in being the premier outsourcing option for fund managers was best illustrated in January this year when BT Funds Management handed its back office and master custody operations to JPMorgan, elevating the bank to number two in the country's master custody league tables. In April, the bank launched the Asset Manager Solutions Group to build on the outsourcing initiatives pioneered in Australia and in the UK where JPMorgan manages the back office function for Schroders. The Asian arm of this group will be run out of Adelaide in Australia where a team of more than 400 back office staff will be located.
Another initiative spearheaded by the bank's regional head of investor services, Laurence Bailey, is to crack the difficult China market where recent changes to the securities regulations promise to spawn a vibrant mutual fund market. New strategic alliances formed this year with Bank of Communications in Shanghai and China Construction Bank in Beijing put the bank in the best position to take advantage of this market as it emerges.
JPMorgan's commitment to quality services, and the reason it wins this year's award, is summed up by one of its sub-custodians. "JPMorgan has the best custody and settlement systems in the business and is constantly updating them. They serve as our internal benchmark for all other custodians to follow."
Best Sub Custodian
A tireless commitment to delivering top quality products and services in the toughest of Asia's emerging markets makes HSBC the best sub-custodian for the third year running. No longer impressed by a bank's ability to deliver services in markets like Singapore and Hong Kong, global custodians increasingly judge their sub-custodians by their performance in more difficult countries. And it is in these markets, bound by stringent legislation and beset by substandard infrastructure, where HSBC proves its superiority.
Global custodians use HSBC in Malaysia, Thailand, Taiwan and India because they deliver. "HSBC offers the greatest consistency between countries," says one happy global custody client. "They differentiate themselves with their ability to mirror their systems and offer the same quality of service in each market, no matter what the obstacles."
This consistency is mirrored in the partnership of the bank's senior custody team led by Nick Bryan which has been together for 10 years - the longest partnership of its kind in Asian custody. Bryan, a stickler for detail, has recently implemented a total quality management system in key sites around Asia to promote uniformity in best practices across its various offices.
In the past year, HSBC's assets under safekeeping have grown to $200 billion, servicing more than 300 institutional clients including all major global custodians and international broker/dealers. These clients include JPMorgan, Brown Brothers Harriman, Bank of Bermuda, Goldman Sachs and Morgan Stanley.
HSBC's in-house systems are second to none, offering clients full straight through processing capabilities and a choice of new or old SWIFT formats. The bank is the largest user of SWIFT in the region. Its real-time technology gives clients instant advice on settlement and portfolio tracking.
But while HSBC's technology is admired and praised by clients, it is the bank's long standing relationships with 18 governments in the region that give it the necessary clout to stay on top of its game. Its stranglehold over more than half of the assets under Hong Kong's new Mandatory Provident Fund scheme is testimony to its key role in the development of the region's fund management industry.
Best Prime Brokerage
As the once obscure hedge fund market in Asia gains popularity with fund managers and plan sponsors, FinanceAsia has decided to acknowledge the providers who service this industry by awarding Goldman Sachs the best prime brokerage award. In simple volume terms, Goldmans is streets ahead of its competitors in the markets that count, claiming a 68% market share of all hedge funds operating in the region, and 90% of Japan's market.
In the past year, the bank has doubled the number of locally-based clients on its books from 20 to 40. This brings the total number of clients it services to 67 when including those Asian hedge funds managed from New York and London.
Goldman Sachs is strongest in Japan and Australia and the bank's executives acknowledge that it was slower than its rivals in setting up in other Asian markets. But the bank has been working hard to rectify this. By far its biggest ace is an unparalleled stockpile of securities that can be lent to hedge fund clients. This pool has been significantly enhanced in Japan where the bank has signed 10 exclusive lending contracts with portfolio managers giving it access to more than $10 billion in lendable securities.
Best Securities Lending
A leader in securities lending for over 25 years, State Street's reputation in Asia precedes it. In a year which has seen a record number of the region's central banks and portfolio managers put their assets into stock lending programmes, State Street has picked up many of these accounts providing lenders with a safe, reliable source of additional income to their portfolios.
The bank has a lendable asset base of between $40 and $50 billion in Asia and an average loan balance of around $10 billion. It handles large fixed-income securities portfolios for central banks in China, Hong Kong and Singapore, while in Japan the bank acts as agent for treasury and sovereign securities held by the country's life and general insurance companies.
State Street's edge comes from its inventory management and control system that operates on a single worldwide platform giving borrowers access to its global book of assets in all time zones. Customers also praise the bank for its reporting capabilities, giving them real-time updates on their portfolios - a service that will soon be available on-line as the securities lending platform is added to the bankÆs other internet-based client information systems.
In its reporting State Street encourages clients to focus on the risk-adjusted return of their portfolios - returns that are enhanced by the bank's collateral management and risk management capabilities.
Best Depositary Receipt House
Bank of New York
A market leader in the ADR field, Bank of New York (BoNY to its friends) is an institution that stands or falls based on the quality of service it supplies to its clients, and the clients clearly like that approach.
Bank of New York has a heavy specialization in DRs, unlike its two major competitors, Citigroup and JPMorgan, which have a much broader product range in comparison (including investment banking). BoNY's focused approach is a differentiator and as any equity analyst will tell you focus often pays dividends.
The number that BoNY likes to point to as the mark of its success is the switch rate. That's when a company moves its ADR from one depositary to another. In the past three years, BoNY has been the beneficiary of 62% of the 130 or so switches that have happened globally.
In Asia it has won 22 new DR programmes this year, only marginally down on the 25 it won last year in a much stronger environment for new issues. It has been responsible for setting up new programmes for Aluminum Corporation of China (Chalco), Korea Tobacco & Ginseng, Compal Electronics and Sunplus Technology. Other key clients in 2001 have included DBS Bank and Kookmin.
BoNY has on the ground client managers in Shanghai, Seoul and other major centres. It feels that the value it adds is in the advice it gives firms on improving their investor relations in the US and thus improving the volume of trading in their ADR programmes.
Notably, it runs two of the most active ADR programmes from the region, for China Mobile and China Unicom. In a fast changing industry it has also spent $595 million on technology in the past year. Tellingly, securities servicing capabilities is the largest contributor to its bottom line.
And even more tellingly still, its global head for ADRs and depositary services, Timothy Keaney spends 50% of his time in Asia. This is a mark of BoNY's commitment to the region and its expectations of its potential for growth.
Best Private Bank
Credit Suisse Private Banking (CSPB) wins the coveted Best Private Bank award for the third year in a row. This was a defining year for the Asian private banking market, with falling stock markets and declining values in most asset classes. The focus came back to wealth preservation, not wealth creation. This is where private banks are meant to excel and this year it was very much the focus.
Yet being a modern private bank is not just about sheltering assets. A vital component involves actively working with clients to help them increase their wealth, in good times as well as bad. And CSPB has the right balance between preserving and creating wealth for its clients. This requires access to global resources and all the tools available to the modern investor. This is where CSPB comes into its own. The bank pioneers the use of open architecture in Asia, giving its clients access to a huge variety of third party investment products, be they funds, derivatives, commodities, equities, bonds or even advice. The bank also takes a very astute view of the Asian private banking market realizing that many of its Asian clients will be entrepreneurs and self-made people. These people need services that sit in a nebulous world between corporate and personal banking. CSPB has an array of products and services that can help these people. Furthermore, the bank realizes that there is also a generational shift happening with wealth being transferred from one generation to the next. This means CSPB has bolstered its trust and inheritance planning divisions in the region to help its clients in the process of wealth transfer.
Finally, as proof of its commitment to the region, the bank recently inaugurated its global private banking centre in Singapore. This acts as both an online and offline hub for its more transactional orientated clients to do whatever they want to do, whenever they want, through the Singapore office. This centre also comes with a 24-hour concierge service to embed the bank within the hearts and minds of its clients. The combination of traditional asset preservation skills with a sharp focus on modern financial technology makes CSPB a very powerful partner for its private banking clients.