Best Domestic Commercial Bank: HSBC
It goes without saying that when Richard Li needed money to arrange his mammoth purchase of Hong Kong Telecom, HSBC was one of the first doors he knocked on. The Bank, as it is known in Hong Kong, is at the centre of almost all economic activity in the city, whether it is mortgages, dispensing cash (75% of adults maintain accounts with HSBC), financing trade or arranging loans for the Airport Authority or the Hong Kong International Terminal.
In case anyone questioned its pre-eminence, witness its victory this year in the battle to become the settlement institution for US dollar clearing û a closely fought battle with two other major international institutions. In the loans market it led floating-rate notes for ANZ and Westpac of Australia as they tapped Hong Kong dollar funds.
It also operates one of the largest trades services floors in the world with 920 staff dedicated to this function in Hong Kong alone. It is the market leader in custody, with over 50% of foreign investment assets under its custody, and provides cash management services to well over three-quarters of the corporate sector, according to one independent estimate.
Its treasury operations for the whole region are based out of the Hong Kong trading floor û one of the biggest in the world û and that gives its local clients the benefit of extraordinary liquidity. It is also the largest retirement fund manager in Hong Kong, and has over 17% of the fund management market, a fact that is helped by its 220-branch network.
Best Foreign Commercial Bank: Citibank
Citibank has repeatedly shown its mettle in adverse conditions. It increased its loans to customers in 1999 despite the fact that overall the lending market contracted 14.7%. In turn, customer deposits in Hong Kong grew by 24.1% last year. Citibank employs 2,500 people in Hong Kong and is very active in the corporate arena. It lead-arranged Amoy Properties HK$1.5 billion (about $192 million) financing, sole-arranged Chinese Estates HK$650 million financing, and saw a 51% increase in its trade finance activities.
Although it has fewer branches than competitors, it has 4,000 drop-off points that have allowed it to make inroads in cash management and custody. Its technology was richly rewarded when it was appointed the payment settlement bank for Visa International in Hong Kong. It is also the second most active player in the forex market, after HSBC. As if all this is not enough, Citibank raised over HK$3 million for the charitable Community Chest, making it one of the top 10 corporate donors.
Best Domestic Investment Bank: CLSA
With 53 research analysts in Hong Kong covering 103 companies, no firm gives the institutional investor the breadth and insight of CLSA. Not surprisingly, its team was ranked first in Hong Kong in Institutional InvestorÆs Asian all-star team, with Dio Wong coming in for special mention. In fact, the firmÆs distinctive research has made some excellent calls, such as Edison LeeÆs May 1999 buy on China Telecom æSeeing through the confusionÆ, and Paul McKenzieÆs piece on Hutchison, æTen good reasonsÆ.
It also has something that few other houses can match: a comprehensive investor forum that this year was attended by 1,200 senior fund managers from 27 countries, and 375 senior executives from 142 leading corporations. This was capped with some late-night investment advice from Welsh mega-crooner Tom Jones.
It was the joint global coordinator for telecom SundayÆs $338 million IPO and sole global coordinator for China Resources $245 million share placing last July. It also advised the Lazard Asia fund on its $35 million acquisition of a controlling stake in Sing Tao Holdings, the first hostile takeover of a listed Hong Kong company for many years.
Best Foreign Investment Bank: Goldman Sachs
It is becoming ever more difficult to distinguish between foreign and domestic in the context of a city like Hong Kong. Goldman, for example, now has well over 800 staff in Hong Kong and manages all of its major Asian businesses û with the exception of M&A û from there. Indeed, Goldman is one of the few firms that saw opportunity in the Asian crisis and increased its headcount by 60% in Hong Kong.
It also showed its commitment to Hong KongÆs most important man/client, Li Ka-shing. Last year it moved out of its offices in Citibank Plaza into LiÆs Cheung Kong Center, where it entered into a 12-year lease on 260,000 square feet. Its special Hong Kong country adviser, Roger Moss, is one of the best-connected expatriates in town (not to mention an expert on Chinese antiques) and has helped to forge key client relationships such as MTR Corp, for whom Goldman has led debt issues and will see through its privatization.
It was also one of three firms selected to handle the governmentÆs Tracker Fund, which amounted to a HK$33.3 billion ($4.3 billion) IPO. It set several records, including the largest ever IPO in Hong Kong at the time.
Getting back to Li, Goldman was the joint placement agent when Hutchison Whampoa sold its 5.1% stake in Vodafone, the largest block trade ever. It also did the $250 million block sale of stock in Li & Fung, and led the $2.9 billion Petrochina sale, which was listed in Hong Kong (as well as New York). Its expertise was again called to the fore when it led a concurrent debt and equity offering for China Telecom, raising $2.6 billion for its client in the process.
In M&A it has also been active (although not unfortunately on PCCW/HKT) advising, for example, the Walt Disney Company on its $5.7 billion partnership with the government to build a theme park. It also acted as the financial adviser to China Telecom in its $6.4 billion acquisition of cellular interests in Fujian, Henan and Hainan mobile.
Goldman also produced a glowing testimonial from a very key client as part of its submission.