Annual Survey | Stars Of China

Author: Tom Leander

BANK WINNERS


CITY COMMERCIAL BANK

Harbin Bank

Harbin Bank, based in the northeastern Chinese city of Harbin, tapped Hong Kong’s capital markets in March, raising $1.1 billion. The IPO was priced at the lower end of its projected range, with investors wary of the asset quality of China’s banks in general. However, Harbin’s nonperforming loan ratio to total loans was a mere 0.86% in September. Once the bank jitters end in China, shareholders may be rewarded.


CONSUMER BANK (DOMESTIC)

ICBC

Like its mainland Big Four peers, ICBC is having issues with new economy lenders like Alibaba and Tencent. It restricted trade with these ecommerce upstarts earlier this year. Meanwhile, it has upgraded its Internet banking. In the past 18 months ICBC won new retail customers by implementing a customer recognition system and introduced what it calls “full-scale” marketing of personal financial products, seizing an even broader customer base. ICBC is taking its consumer banking prowess overseas. In October, it received approval to initiate banking services in Myanmar alongside three Japanese megabanks. 


CONSUMER BANK (FOREIGN)

Citi

Citi’s business in China is going great guns. One of the first banks to open its doors in the Shanghai Free-Trade Zone, Citi earns about $1 billion in annual revenues in the country. Always a major presence in Asia, Citi now draws about one-quarter of its regional revenues from China. It boasts 52 consumer banking outlets in 13 cities and has also opened four lending companies. Citi has improved offerings for more affluent customers, wrapping together premium services to build strong customer loyalty.


CORPORATE GOVERNANCE

China Merchants Bank

The sixth-largest commercial bank in China by assets, China Merchants Bank has earned higher marks than its peers for disclosure during this period in which concern over bank credit quality has reemerged. Moody’s upgraded China Merchants Bank, based on such criteria as its relatively low cost of funds compared with other large Chinese banks. The clarity of its disclosure and confidence in its governance system is behind regulatory approval for China Merchants Bank to use an internal ratings-based approach for credit risk weightings under Basel III, beginning in 2015. It is only one of six domestic banks to earn the privilege.


CORPORATE BANK (DOMESTIC)

ICBC

ICBC is the backbone lender to domestic corporates that are reshaping China’s economy. Some 76% of its corporate loan portfolio involves loans extended to advanced manufacturing, modern services, cultural industries and strategic emerging industries. The bank also ramped up its green economy lending to projects that meet environmental protection standards. ICBC recently integrated diversified financing instruments like financial leasing, short- and medium-term notes and syndicated loans to reduce overall financing costs for enterprises.


CORPORATE BANK (FOREIGN)

DBS Bank

In the past 18 months DBS Bank used its strength as a leading Asian bank to tap its offshore counterparts and offer one-stop banking solutions in China. It provides domestic clients with access to China and offshore financial markets in products such as working capital financing, equipment financing, acquisition financing, capital expenditure financing, cross-border financing, cash management and treasury and debt and equity fundraising. A signal of its rising dominance in Chinese corporate banking: In 2013, DBS Bank helped arrange the $8 billion syndicated loan facility for Alibaba Group, which was the largest corporate facility in Asia ex-Japan that year.


COMMERCIAL CORPORATE CREDIT CARD

ICBC

ICBC has introduced an array of dual currency credit cards, including its popular Dual-Currency Business Visa Credit Card. It has teamed up with UnionPay to offer a variety of dual currency cards, including one targeted at employees of a Chinese state enterprise in Singapore. In response to the credit crunch experienced by smaller businesses in China, this year ICBC introduced a card designed for small and micro enterprises, leveraging new big-data capabilities to support risk management of credit card loans.


CONSUMER CREDIT CARD

Deutsche Bank/Hua Xia Bank

Hua Xia Bank, Deutsche Bank’s partner in China, is a midsize lender that has cut an impressive niche in the consumer credit card market. Consumer credit card wars have heated up in China this year, but Hua Xia’s Pretty Lady Card has turned out to be the most popular with young, affluent women. Cardholders can earn points that link to fitness clubs, cosmetic retailers and even discounted health insurance.


CROSS-BORDER PAYMENTS (DOMESTIC)

Bank of China

Bank of China (Hong Kong) is the largest renminbi-participating bank in Hong Kong, and one of the largest in the world through its global branch network and links with correspondent banks. Its parent, Bank of China, has the largest market share in international trade settlement in mainland China. It is also the lead underwriter and distributor of offshore renminbi bonds issued by sovereign institutions, policy banks, multinationals and growing Chinese companies, making it a leading force in internationalizing the renminbi.


CROSS-BORDER PAYMENTS (FOREIGN)

Citi

An early entrant into the Shanghai Free-Trade Zone, Citi piloted the world’s first cross-border netting structure in China. The structure allowed Roche to use its Shanghai FTZ entity to consolidate all renminbi cross-border transactions from domestic participating companies and settle on a net basis with the company’s offshore treasury center.


DEBT CAPITAL MARKETS (DOMESTIC)

CITIC Securities

The nation’s largest brokerage and also one of its biggest domestic bond issuers broke the mold in 2013 with its first international bond offering, an innovative $800 million offering linked to a standby letter of credit. The use of the SBLC allowed CITIC to come to market for its first overseas listing without lengthy regulatory approval, squeezing into a closing issuance window and achieving lower funding costs. 


DEBT CAPITAL MARKETS (FOREIGN)

SC Lowy

This relatively small, Hong Kong–based global fixed-income specialist was launched only five years ago, when its co-founders, Michel Löwy and Soo Cheon Lee, left Deutsche Bank to start their own firm. It recently made its entry into debt capital markets as joint bookrunner in this year’s $125 million, five-year bond for Hong Kong–listed real estate developer Redco Properties. The firm’s blue-chip client list suggests the emergence of a tough, new challenger to the bulge brackets.


EQUITY CAPITAL MARKETS (DOMESTIC)

China Securities

Not exactly a household name internationally, China Securities and its recently opened Hong Kong unit, China Securities (International), has made global investment banks take notice. In the first half of 2014, China Securities was the top Chinese-based bookrunner in Dealogic’s league tables in equity capital markets, beating HSBC and J.P. Morgan.


EQUITY CAPITAL MARKETS (FOREIGN)

Goldman Sachs

Goldman Sachs led all global equity capital markets activity in 2013. China was no exception. The New York–based investment bank scored first place as 2013 underwriter in Thomson Reuter’s league tables for Asia ex-Japan equity issuance, including Chinese A-shares.


FOREIGN EXCHANGE PROVIDER (DOMESTIC)

Bank of China

As a primary clearer of international renminbi payments in China, Hong Kong and most overseas markets, Bank of China is a dominant player in overseas renminbi markets. It retains its top spot in Stars of China because of its expansion of integrated trade finance and supply chain offerings with new forex products and services launched since 2013.


FOREIGN EXCHANGE PROVIDER (FOREIGN)

Citi

Citi has leveraged its Asia-wide presence to focus on key regional corporate clients, including Chinese corporates internationalizing in Southeast Asia. Citi continues to invest in cutting-edge forex and ecommerce technology. Clients cite the bank’s first-rate forex research and market coverage in China as well as India, Indonesia, Philippines, Taiwan and Thailand.


INFRASTRUCTURE LENDING/PROJECT FINANCE (DOMESTIC)

Bank of China

Bank of China has extended its push in Africa this year, where it is gaining on rival ICBC. Meanwhile, on its home turf, its selective approach to projects has led to sturdier credit quality in its infrastructure lending assets than its Big Four rivals.


INFRASTRUCTURE LENDING/PROJECT FINANCE (FOREIGN)

ANZ Group

Australia and New Zealand Group has been in China since 1987. Earlier this year it agreed to operate as an adviser to China Development Bank on its investment and lending decisions in Australia, where the Chinese policy bank is looking to invest in infrastructure projects to extract resources.


INNOVATIVE BANK

China Construction Bank

China Construction Bank was a lead innovator in more than a dozen custody categories from 2013 to 2014. It qualified as a custodian for Ping An Insurance’s stock index futures trades. It also developed special service arrangements to address the investment and operating needs of a popular gold-exchange-traded fund product, ensuring the completion of trade-plus-zero settlement of the product between Zhongdeng China and Shanghai Gold Exchange.