The Stars Of China: Banks

By Thomas Clouse

BEST CORPORATE GOVERNANCE

China Construction Bank

China Construction Bank was among the first banks in China to invite independent directors to join its board and foreign strategic partners to invest. Led by Guo Shuqing, one of China’s most well-known bankers, China Construction Bank’s board of directors manages the bank’s operations primarily through committees responsible for various aspects of the bank’s business, including strategic development, risk management and related party transactions, among others. The strict oversight helped the bank achieve first-half profit growth of 31% with an NPL ratio of only 1.03%.

BEST CORPORATE BANK, DOMESTIC

Industrial and Commercial Bank of China

Industrial and Commercial Bank of China has expanded its global reach while further solidifying its leading position at home. ICBC ranks first in China’s banking industry in corporate lending and deposits, with 12.1% and 12.9% market share respectively. The bank has strengthened its small-business lending services, while capitalizing on its growing international presence to expand its trade finance and renminbi settlement services.

BEST CORPORATE BANK, FOREIGN

Citi

Citi has the widest corporate product line among foreign banks in China. The bank solidified its popularity with multinational companies, adding 400 more multinational clients last year, while expanding its services for domestic companies. In September 2010, Citi launched China desks in six hubs around the world to allow its Chinese clients to access the bank’s global financial network for international expansion. Citi also helped some of China’s largest companies raise money through international channels, including $2 billion bond issuances for both Sinochem and CNOOC.

BEST CREDIT CARD

Guangfa Bank

Guangfa Bank is one of the few Chinese banks that has been able to make its credit card business a significant contributor to its profit. The bank has issued more than 10 million credit cards and expanded its credit card overdraft balances by 88% last year to RMB31 billion ($4.8 billion). This figure represents more than 29% of the bank’s personal loan portfolio. Earlier this year, Guangfa signed a deal to cooperate with ecommerce company Alibaba.

BEST EQUITY UNDERWRITING, DOMESTIC

Ping An Securities

China’s IPO activity has shifted this year from Shanghai’s exchange to the smaller Shenzhen and ChiNext exchanges. With that shift several smaller Chinese brokerages have risen to the top of the equity underwriting rankings. Ping An Securities underwrote 27 deals in the first eight months of the year—more than the combined total number of deals worked on by traditional investment banking powers CICC and Citic Securities.

BEST EQUITY UNDERWRITING, FOREIGN

Morgan Stanley

Morgan Stanley led all underwriters in China-related equity deals in the first eight months of the year, working on 23 deals worth $6.2 billion, according to figures from Dealogic. This comes on top of a busy 2010, when the bank underwrote 47 China-related deals. Morgan Stanley agreed in June to purchase a 33% stake in domestic brokerage firm China Fortune Securities.

BEST INFRASTRUCTURE LENDING

China Development Bank

China Development Bank has made great progress in recent years toward being market-oriented without losing sight of its original mandate to promote the country’s development. Last year, CDB increased its profits by 16% and lowered its nonperforming loan ratio to 0.65% while extending more than half of its loans to China’s less-developed western regions.

BEST M&A;, DOMESTIC

China International Capital Corporation

While China’s securities firms have made tremendous progress in recent years, CICC remains the most capable for handling large M&A; projects. Earlier this year the firm served as sole adviser on the RMB3.57 billion acquisition of Citic Pharm by Shanghai Pharmaceutical Group, the largest-ever M&A; transaction in drug distribution by Chinese companies. The deal was one of 27 for CICC in the first eight months of 2011. Last year CICC led all investment banks in China-related M&A; advising, working on 46 deals, according to Dealogic.

BEST M&A;, FOREIGN

Goldman Sachs

Goldman Sachs is leading all investment banks in announced M&A; deals thus far in 2011, with more than 8% of the market. Through its own China joint venture, Goldman Sachs Gao Hua, the bank has been able to court potential clients for domestic and international deals. In the spring Goldman advised CNOOC in its joint bid with Total to buy a 66% interest in Tullow Oil’s oil blocks in Uganda, as well as advising Motel 168 in its $470 million sale to Home Inns.

BEST FUND MANAGEMENT

China AMC

China AMC is not only the largest fund manager in China by assets, number of clients and market share, but has provided strong returns in the very volatile market, largely by rewarding long-term performance among its fund managers. For the five years ending 2010, China AMC’s average return for all its funds was 322%, while the Shanghai Composite rose only 142%.

BEST AT RURAL FINANCE, DOMESTIC

Chongqing Rural Commercial Bank

Chongqing Rural Commercial Bank became the first publically traded regional rural lender after its $1.48 billion IPO in Hong Kong last December. The bank has gained momentum in the first half of 2011, with its profits up almost 35% and its NPL ratio below 2%. The bank recently partnered with smartphone producer HTC to offer mobile phones with payment capabilities.

BEST AT RURAL FINANCE, FOREIGN

HSBC

Several foreign banks are making inroads into China’s rural regions, hoping to take advantage of the underdeveloped banking markets and government policies encouraging economic growth. HSBC became the first foreign bank to open a rural outlet in late 2007, and the bank has not relinquished its lead. In July, HSBC became the first foreign bank to open a rural outlet in eastern China’s Shandong province, its 17th rural outlet nationally.

BEST SMALL BUSINESS LENDING, DOMESTIC

China Minsheng Bank

China’s small and medium-size enterprises have always struggled to secure funding, and the central bank’s recent monetary tightening has turned this pressure up a notch. China Minsheng Bank has built a reputation for servicing this dynamic segment of companies, and it has expanded that service in the past year. In addition to increasing its SME loan portfolio by 15% in the first six months of the year, the bank has helped SMEs tap other sources of funding, including corporate bonds, commercial bills and capital markets.

BEST SMALL BUSINESS LENDING, FOREIGN

Standard Chartered

Standard Chartered has continually improved and expanded its SME services and now has dedicated SME teams in 18 cities across China. The bank employs a variety of innovative strategies to evaluate companies’ growth potential and rate their creditworthiness. The bank also offers regionally-focused trade services which assist Chinese SMEs interested in international expansion. It also recently partnered with the China Business Network to launch the SME confidence index.

BEST SUPPLY CHAIN FINANCE, DOMESTIC

China Citic Bank

Citic Bank offers tailored supply chain finance solutions to its customers and has built up a particularly strong presence in China’s automotive industry. The bank has also implemented an electronic platform to simplify financial transactions. As a result, Citic Bank saw it its aggregate volume of supply chain financing jump by 44% year-on-year in the first half of 2011.

BEST SUPPLY CHAIN FINANCE, FOREIGN

Standard Chartered

Standard Chartered has a strong global presence in supply chain finance and is applying that expertise to its China business. The bank builds on the interrelationships among suppliers and buyers to optimize efficiency in client supply chains. Buyers and suppliers are evaluated as elements in larger supply networks as well as independent companies. The bank utilizes an innovative electronic platform and offers supplier and buyer finance programs as well as a vendor prepay service.

BEST TREASURY AND CASH MANAGEMENT, DOMESTIC

Bank of Communications

Bank of Communications is a pioneer among Chinese banks for its work in treasury and cash management. The bank has recently adjusted its internal personnel structures to expand cash management expertise and held training sessions to educate its employees about all the ways in which cash management products can help their customers. BoCom has also added new client services such as mobile authorization, additional international trade and B2B ecommerce solutions.

BEST TREASURY AND CASH MANAGEMENT, FOREIGN

DBS Bank

Singapore-based DBS Bank has capitalized on its regional expertise to court domestic Chinese companies operating in nearby markets and Asian companies working in China. DBS pairs its treasury and markets team with its global transaction services team, a practice that boosted trade revenue by 257% year-on-year in the first half. DBS China increased its cash revenue by 76% in the same period, and its cash management business has averaged an annual growth rate of more than 50% over the past five years.

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