You are here: Home » Reuters » News
Business Standard

Back to basics: global investment banks beef up transaction business in Asia

Reuters  |  HONG KONG 

By Sumeet Chatterjee

(Reuters) - With dealmaking in sluggish and Chinese investment banks taking market share from global rivals, some foreign banks are ploughing resources into banking, the workaday business of financing trade, managing and facilitating payments.

At a time of growing intra-regional trade in Asia, the largest trading region in the world, and expansion of supply-chain networks beyond China, promises to offset slowing revenues elsewhere.

While existing powerhouses including Citigroup and HSBC are expanding sales and reach, firms who have traditionally focussed more on investment banking, such as JPMorgan and Deutsche Bank, are also bulking up.

In its inaugural league table, industry analytics firm Coalition this week ranked HSBC and JPMorgan as the two strongest performers in 2016 in Asia, based on revenue, versus a year earlier.

"Across the board, we do see most of the traditional investment banks are investing in banking," Eric Li, London-based research and analytics director at Coalition, told

"They realise the investment pool is more volatile, and secondly there is very limited room to further improve," he said, adding the top 12 foreign banks' revenue concentration in investment was already above 60 percent.

In contrast, these banks account for just 15 percent of the market for management in the region, Li said.

As a result, the banks are gearing up to tap a likely pick-up in trade and using their investment platforms as a lever to pick up more business, which consumes less capital and delivers more stable returns.

"We contribute in terms of relationship, we contribute in terms of funding, and we contribute in terms of a steady source of business," said Lisa Robins, Pacific head of global at Deutsche Bank.

"I won't say (it) doesn't use capital, because we do use capital, but it's a relatively efficient business."

Robins declined to give a business forecast, but the bank said in May last year that within banking, the share of revenue coming from could rise to a quarter in the coming years from 18 percent.

BOOSTING HEADCOUNT

While 2016 saw many foreign banks cutting investment headcount in to cope with sluggish deals activity, staff additions for the business was strong, headhunters and some bankers said.

This year, global banks' headcount for in could rise 5 percent, while investment is likely to be flat or fall 5 percent, said John Mullally, director of financial services at headhunter Robert Walters.

JPMorgan, for instance, has added more people both on the sales side and the product side in in Asia, helping it expand its share, said Muhammad Aurangzeb, head of its Pacific corporate

Banks such as Deutsche and JPMorgan are also increasingly using their investment clout to win more bread-and-butter trade finance and management services to develop their client relationships.

"We are saying (to investment clients) we want to go wider and deeper with you," said Aurangzeb.

"We don't want to just do an M&A trade, or your IPO or your block trade and forget about it till we meet again in a year and a half's time."

They will nevertheless face stiff competition to win market share from global rivals such as Citigroup and HSBC that have much bigger balance sheets and networks in the region.

HSBC, for example, is looking to add around 500 new staff in commercial banking, which includes banking, in Pacific this year, to capitalise on initiatives such as China's "One Belt, One Road" project, which aims to develop trade and connectivity with the rest of Eurasia.

"Economic weight is shifting to Asian and Middle Eastern economies which are expected to grow their GDP threefold between now and 2050," said Ajay Sharma, HSBC's regional head of global trade and receivables finance in Pacific.

"That's the sweet spot for our customers and our global footprint."

(Reporting by Sumeet Chatterjee; Editing by Will Waterman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Back to basics: global investment banks beef up transaction business in Asia

HONG KONG (Reuters) - With dealmaking in Asia sluggish and Chinese investment banks taking market share from global rivals, some foreign banks are ploughing resources into transaction banking, the workaday business of financing trade, managing cash and facilitating payments.

By Sumeet Chatterjee

(Reuters) - With dealmaking in sluggish and Chinese investment banks taking market share from global rivals, some foreign banks are ploughing resources into banking, the workaday business of financing trade, managing and facilitating payments.

At a time of growing intra-regional trade in Asia, the largest trading region in the world, and expansion of supply-chain networks beyond China, promises to offset slowing revenues elsewhere.

While existing powerhouses including Citigroup and HSBC are expanding sales and reach, firms who have traditionally focussed more on investment banking, such as JPMorgan and Deutsche Bank, are also bulking up.

In its inaugural league table, industry analytics firm Coalition this week ranked HSBC and JPMorgan as the two strongest performers in 2016 in Asia, based on revenue, versus a year earlier.

"Across the board, we do see most of the traditional investment banks are investing in banking," Eric Li, London-based research and analytics director at Coalition, told

"They realise the investment pool is more volatile, and secondly there is very limited room to further improve," he said, adding the top 12 foreign banks' revenue concentration in investment was already above 60 percent.

In contrast, these banks account for just 15 percent of the market for management in the region, Li said.

As a result, the banks are gearing up to tap a likely pick-up in trade and using their investment platforms as a lever to pick up more business, which consumes less capital and delivers more stable returns.

"We contribute in terms of relationship, we contribute in terms of funding, and we contribute in terms of a steady source of business," said Lisa Robins, Pacific head of global at Deutsche Bank.

"I won't say (it) doesn't use capital, because we do use capital, but it's a relatively efficient business."

Robins declined to give a business forecast, but the bank said in May last year that within banking, the share of revenue coming from could rise to a quarter in the coming years from 18 percent.

BOOSTING HEADCOUNT

While 2016 saw many foreign banks cutting investment headcount in to cope with sluggish deals activity, staff additions for the business was strong, headhunters and some bankers said.

This year, global banks' headcount for in could rise 5 percent, while investment is likely to be flat or fall 5 percent, said John Mullally, director of financial services at headhunter Robert Walters.

JPMorgan, for instance, has added more people both on the sales side and the product side in in Asia, helping it expand its share, said Muhammad Aurangzeb, head of its Pacific corporate

Banks such as Deutsche and JPMorgan are also increasingly using their investment clout to win more bread-and-butter trade finance and management services to develop their client relationships.

"We are saying (to investment clients) we want to go wider and deeper with you," said Aurangzeb.

"We don't want to just do an M&A trade, or your IPO or your block trade and forget about it till we meet again in a year and a half's time."

They will nevertheless face stiff competition to win market share from global rivals such as Citigroup and HSBC that have much bigger balance sheets and networks in the region.

HSBC, for example, is looking to add around 500 new staff in commercial banking, which includes banking, in Pacific this year, to capitalise on initiatives such as China's "One Belt, One Road" project, which aims to develop trade and connectivity with the rest of Eurasia.

"Economic weight is shifting to Asian and Middle Eastern economies which are expected to grow their GDP threefold between now and 2050," said Ajay Sharma, HSBC's regional head of global trade and receivables finance in Pacific.

"That's the sweet spot for our customers and our global footprint."

(Reporting by Sumeet Chatterjee; Editing by Will Waterman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Back to basics: global investment banks beef up transaction business in Asia

By Sumeet Chatterjee

(Reuters) - With dealmaking in sluggish and Chinese investment banks taking market share from global rivals, some foreign banks are ploughing resources into banking, the workaday business of financing trade, managing and facilitating payments.

At a time of growing intra-regional trade in Asia, the largest trading region in the world, and expansion of supply-chain networks beyond China, promises to offset slowing revenues elsewhere.

While existing powerhouses including Citigroup and HSBC are expanding sales and reach, firms who have traditionally focussed more on investment banking, such as JPMorgan and Deutsche Bank, are also bulking up.

In its inaugural league table, industry analytics firm Coalition this week ranked HSBC and JPMorgan as the two strongest performers in 2016 in Asia, based on revenue, versus a year earlier.

"Across the board, we do see most of the traditional investment banks are investing in banking," Eric Li, London-based research and analytics director at Coalition, told

"They realise the investment pool is more volatile, and secondly there is very limited room to further improve," he said, adding the top 12 foreign banks' revenue concentration in investment was already above 60 percent.

In contrast, these banks account for just 15 percent of the market for management in the region, Li said.

As a result, the banks are gearing up to tap a likely pick-up in trade and using their investment platforms as a lever to pick up more business, which consumes less capital and delivers more stable returns.

"We contribute in terms of relationship, we contribute in terms of funding, and we contribute in terms of a steady source of business," said Lisa Robins, Pacific head of global at Deutsche Bank.

"I won't say (it) doesn't use capital, because we do use capital, but it's a relatively efficient business."

Robins declined to give a business forecast, but the bank said in May last year that within banking, the share of revenue coming from could rise to a quarter in the coming years from 18 percent.

BOOSTING HEADCOUNT

While 2016 saw many foreign banks cutting investment headcount in to cope with sluggish deals activity, staff additions for the business was strong, headhunters and some bankers said.

This year, global banks' headcount for in could rise 5 percent, while investment is likely to be flat or fall 5 percent, said John Mullally, director of financial services at headhunter Robert Walters.

JPMorgan, for instance, has added more people both on the sales side and the product side in in Asia, helping it expand its share, said Muhammad Aurangzeb, head of its Pacific corporate

Banks such as Deutsche and JPMorgan are also increasingly using their investment clout to win more bread-and-butter trade finance and management services to develop their client relationships.

"We are saying (to investment clients) we want to go wider and deeper with you," said Aurangzeb.

"We don't want to just do an M&A trade, or your IPO or your block trade and forget about it till we meet again in a year and a half's time."

They will nevertheless face stiff competition to win market share from global rivals such as Citigroup and HSBC that have much bigger balance sheets and networks in the region.

HSBC, for example, is looking to add around 500 new staff in commercial banking, which includes banking, in Pacific this year, to capitalise on initiatives such as China's "One Belt, One Road" project, which aims to develop trade and connectivity with the rest of Eurasia.

"Economic weight is shifting to Asian and Middle Eastern economies which are expected to grow their GDP threefold between now and 2050," said Ajay Sharma, HSBC's regional head of global trade and receivables finance in Pacific.

"That's the sweet spot for our customers and our global footprint."

(Reporting by Sumeet Chatterjee; Editing by Will Waterman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22