As Asia restructures itself out crisis, banking consolidation has increasingly come to the fore and Financial Institutions Groups correspondingly become a more important and prominent component within investment banking. JP Morgan was one of the first of the major banks to spot the opportunity and still has one of the largest teams in the region, with 14 bankers, of whom 13 are based in Hong Kong and one in Singapore.

The bank operates a slightly different structure to many of its competitors, however, splitting FIG's M&A functionality and its capital markets functionality between different departments. The teams of James von Moltke and Marc Jones respectively offer JP Morgan's on the ground relationship banks credible M&A and DCM products. Both teams have had an active year.

On the M&A side, the firm has completed Asia's second largest financial institutions merger on record; it has led the banking consolidation process in Malaysia and it has restructured one of Singapore's key domestic banks.

The transactions in the Philippines and Malaysia stand out. Acting as financial advisor to the Bank of Philippines Islands (BPI) in its $1.22 billion merger with Far East Bank and Trust Company, JP Morgan helped create a bank with an approximate asset base of $8.7 billion, making it the largest bank in the Philippines and one of the top 10 lending institutions in Asia. The transaction straddles both 1999 and 2000, having been announced in October 1999 and completed in April 2000.

The bank played a critical role for a number of reasons, not least because it identified Far East as a key target in the Philippines' evolving banking sector and approached BPI with an acquisition strategy. The merger was complicated by two factors: a fragmented shareholding structure and a hostile threat from Metrobank. Yet, what BPI ended up with was the merger it had intended from the very beginning and the added bonus of a strategic partnership with Singapore's DBS, which had the foresight to recognize that a lot of Far East Bank shareholders were being shaken loose by the transaction and came in to mop them up.

Where Malaysia is concerned, JP Morgan also stands out for its role advising Malayan Banking Berhad, the 'poster child' of the government's aggressive bank consolidation policy. But Maybank's acquisition of Phileo Allied Berhad proved to be particularly tricky since it ran up against the objections of major shareholder Avenue Assets, which also happened to be controlled by a son of Mahathir Mohammed. To have not completed a deal because the Prime Minister's son said no would have sent a wave of negative signals to the rest of the financial sector and it is to both banks' credit that a restructured deal could be put forward and approved by the August 31 deadline.

On the debt side it has been at the forefront of the emergence of subordinated debt as an asset class in Asia, particularly for the non-investment grade sector, following the launch of Hanvit Bank's groundbreaking $850 million transaction in February - FinanceAsia's Best Overall Debt Deal.

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