Best Domestic Commercial Bank: Thai Farmers Bank
These have not been easy times to be a banker in Thailand and one thing is certain: it is not going to get any easier. While credit quality will improve, Thai bankers are now facing an unprecedented battle with foreign banks, whose incursions into their home market get bolder every month. Thai Farmers Bank, as the most technology-savvy of the local banks, will lead the counter-attack. It is the third largest bank in the country with 532 branches and 762 ATMs, and operates in all 76 of ThailandÆs provinces.
Like all the best banks in Asia, Thai Farmers has refined its strategy since the crisis. It is now targeting high net worth individuals, mortgages, and small business and medium-sized companies. The bank is integrating customer databases to improve its ability to cross-sell products; and has engaged an international consulting firm to create a new credit risk model. It has also strengthened the credit culture by separating the role of its credit managers and corporate relationship managers (of whom there are 200 in Bangkok).
Thai Farmers is creating a hub-and-spoke approach to branch back office management, in which operation centres take over the processing work. This leaves the staff in branches free to sell.
Perhaps most encouraging about the new Thai Farmers Bank is its mantra that it will compete on relationships not price. In respect to the consumer market, its branding continues to confer excellence.
The bank has a 13.9% share of deposits and 22.7% of the credit card business. It has a capital adequacy ratio of 12.52% (as of March) and in the first quarter showed the highest return on equity in the banking sector (4.61% versus the average of minus 57.81% of its four biggest competitors).
Best Foreign Commercial Bank: HSBC
HSBC was the first ever bank in Thailand, and after a period where it has let a few people catch up, itÆs now well and truly on the move again. With one of Stuart GulliverÆs most able lieutenants, Mark Boyne, now running the treasury, the bank has already started to show results. Its Bt5 billion ($128 million) deal for Thai Exim is a case in point. The client had originally wanted to borrow dollars, but HSBC placed the bonds locally at a far lower coupon and then arranged the $128 million swap. Nice business when you can get it; and a happy client to boot.
HSBC is the largest provider of securities services in Thailand and the largest sub-custodian, with over $120 billion under safekeeping. It is number two in domestic clearing services for payment clearing through ThailandÆs automated clearing house. It also has up-country cheque collection services and covers all 40 Thai clearing zones (with dual language reporting). HSBC has, in fact, seen an 800% increase in cash management deals won in 1999 to date and has also began to push into personal banking û where it has seen deposits grow at a phenomenal rate thanks to a flight to quality. The icing on the cake would be if its proposed acquisition of 75% of Bangkok Metropolitan Bank succeeded.
Best Domestic Investment Bank: Merrill Lynch Phatra
There are two local forces, Merrill Lynch Phatra and Jardine Fleming û although in the latter case it remains to be seen how the brilliant Korn Chatikavanij adapts to life without equity (now his family has sold to Chase). In MerrillÆs case, it has successfully integrated its acquisition of Phatra and currently has a market share of 6.7% on the local exchange.
MerrillÆs dominance is aptly reflected by the mandate it won to lead Thai Farmers BankÆs $600 million equity issue in October. It also advised on the 70.5% sale of Thai Gypsum Products to British Plaster Board, and led more domestic bond issues in 1999 than any of its competitors (seven issues worth $540 million).
Best Foreign Investment Bank: Deutsche Bank
This award is being made on the basis of DeutscheÆs incredible contribution to the most dynamic and critical part of the Thai financial system û its local debt market. With its strong balance sheet, know-how and systems, Deutsche entered the Thai local debt market last year and quickly proved the most aggressive of the foreign participants. Although Thai Farmers Bank has been the leading local bank in this sphere, Deutsche lead managed more Thai baht transactions than any other foreign bank.
In 1999 it led eight issues that amounted to Bt18.8 billion, while in the first quarter of this year it led three transactions totaling Bt26.7 billion. Deutsche co-managed the biggest transaction to date: the BT14 billion mega-deal for Siam Cement. It also won plaudits for its joint-led deal for Shin Satellite last November, which won FinanceAsiaÆs local currency debt deal of the year for its efforts to bring the quality of disclosure to international standards. Special mention should go to Rags Ragavan and Triyangkusiri Kunnigar for their round-the-clock efforts to help Thai corporates realize their financing needs.