Bank of the year

In a year when bond offerings reached new heights, China embraced global markets and equity financings put India and Australia back on the world stage, one bank captured every trend. For its unrivalled breadth of expertise, Citigroup is IFR Asia’s Bank of the Year.

Citigroup’s global platform proved invaluable in 2014, as the bank helped clients across Asia access low-cost debt capital and surging international equity markets.

The US bank has proven its commitment to Asia multiple times since the global financial crisis, and that staying power was one of its greatest assets in a year when major international financings emerged across the region.

Citigroup posted its biggest year so far in international bonds, arranging 137 deals for a 9.9% share of the G3 new-issue market in Asia Pacific, excluding Japan.

It captured more than its fair share of the China technology sector boom, thanks largely to a highly sought-after mandate on Alibaba Group’s US$25bn record IPO, and was a constant feature on debt and equity capital raisings in India and Australia, two markets that rebounded during the year under review.

“The trend today is one of cross-border flows of capital, and being able to serve a client wherever it makes sense for their business is our particular value proposition,” said Mark Slaughter, head of corporate and investment banking for Asia Pacific. “Our strategy has been consistent, and 2014 was a year when it all came together.”

“One of the ways I describe our business is that we are a money logistics firm,” said Michael Borch, COO for corporate and investment banking, Asia Pacific. “We make sure the money shows up in the right place and in the right amount, and that facilitates trade and investment.”

The growing number of global financings that emerged from Asia in 2014 played to Citigroup’s strengths, but it was far from a given that the bank would feature on so many.

Its revamped coverage model – where the key metric is share of wallet, rather than absolute income – has seen it sharpen its focus on its most valuable “franchise clients”, helping it to identify where to allocate resources most effectively.

Citigroup is no longer the bank that attempts to be all things to all people, or the top of every league table, but, continually ensuring that its client list fits across the broader banking franchise, has enabled it to maintain one of the broadest coverage models in Asia without running an unsustainable cost base.

“We have increased the number of franchise clients this year, and by quite a lot,” said Borch. “It feels as though there is some momentum in the market again, and we’ve benefited from that.”

That discipline stands it in good stead to weather regulatory changes that are increasing the cost of maintaining client relationships. It also allows Citigroup to protect specialist bankers in a lean year, with the understanding that they will be under pressure to perform when their markets pick up.

As a result, the bank’s platform has been largely stable in recent years, and the experience of its senior bankers allowed it to add new business in markets that rebounded in 2014.

“We are adding new clients,” said Slaughter. “The focus is on growing, not exiting, relationships. It’s a natural evolution, once we’ve weathered the storm, and it’s a lot more fun for our people.”

Alibaba, for instance, was an entirely new client to Citigroup three years ago, and most of the banks that would run its landmark New York IPO were already firmly entrenched with the group. Even after deciding on a US listing over Hong Kong, China’s biggest ecommerce group hardly needed another US bank to help market its listing.

Citigroup, however, positioned itself as a full-service provider, capable of offering far more than equity capital markets advice, and built the company into a franchise client. Its role on the IPO and syndicated loans completed during IFR’s review period would put it in a good position to arrange a record bond issue later in November, and Citigroup’s cash management and transaction experience is likely to be just as important for Alibaba’s expansion plans.

“When Alibaba looked at our product set across all of banking, and thought about the bank that they wanted to align with who wasn’t already baked into the process, they chose us, and I think that’s a phenomenal testament to our franchise,” said Borch.

While Alibaba was, undoubtedly, the bank’s trophy mandate of 2014, Citigroup’s equity franchise was more than just a one-trick pony. The bank completed more deals, upped its league table volume and grew its market share during the 2014 review period, ranking fifth on the Thomson Reuters global equity and equity-related league table with a 5.1% market share.

It chalked up roles on other major equity financings for Asia’s technology sector, which accounted for a quarter of all Asian equity-related issuance in the year under review. It was part of the IPOs of Baioo and Xunlei, a joint lead on the US$1bn convertible bond for US-listed Qihoo 360 Technology, and also handled CBs for SouFun, YY and Zhen Ding Technology.

Far and wide

Its ECM tally stretched across the region, with mandates on a US$1.3bn follow-on for State Bank of India, which was India’s biggest qualified institutional placement on record, South Korea’s biggest block trade of the review period for a Samsung stake in Samsung Life, and Hong Kong listings for the likes of Qinghuangdao Port and Luye Pharma Group, the latter a commercial banking client and IFR Asia’s Hong Kong Equity Issue of the Year.

Citigroup also underlined its investment-banking credentials with successful risk trades, including Australia’s biggest block trade from the real-estate sector, an A$849m sole-led clean-up deal for CapitaLand in ASX-listed Australand, and a ballsy A$3.2bn sale of Woodside Petroleum shares by Royal Dutch Shell.

“We sat down with the Australian team a year ago to help them design a plan, and they have absolutely delivered on that,” said Borch.

Citigroup’s balance sheet, while still a far more precious commodity than in the pre-crisis boom years, allowed it to deliver the full suite of financing solutions across Asia Pacific. It extended loans to support complex deals, and worked with colleagues to package financings across the bank.

Blackstone’s US$642m acquisition of US-listed Chinese outsourcing specialist Pactera Technology International brought together the loan and bond platform, offering the private-equity firm a fully committed US$395m acquisition financing, including US$275m that would be taken out with a high-yield bond before the acquisition had even closed.

Citigroup showed it is back to its best in international bonds, with another strong showing that put it within a whisker of the top spot on the Thomson Reuters G3 league table for Asia Pacific, excluding Japan.

China’s continued push into the global debt capital markets fit Citigroup’s expertise during the year, and it combined its strong US dollar franchise and leading oil-and-gas sector coverage to deliver jumbo low-coupon financings for the likes of CNOOC, Sinopec and CNPC. Those massive investment-grade deals handed Citigroup a significant boost over its 2013 league table ranking for Greater China, by far the biggest source of G3 bonds from Asia Pacific during the year, but its coverage also extended further down the credit curve.

Banks can no longer claim to cover China by relying on public-sector connections alone, and Citigroup’s ability to bring the country’s private-sector champions to the global markets was on show with deals for Tencent, Geely and Guangzhou R&F, to name but a few.

Citigroup impressed in opening new markets and delivering capital for new issuers, bringing a debut US dollar bond from Tata Steel, taking Indonesia to the euro market and arranging the first international bond from Bangladesh – all of which feature among IFR Asia’s list of award winners.

It was not afraid to push the envelope on pricing, driving AIA’s 144A debut more than 20bp inside its Reg S curve with an ideally timed deal in March.

“What Citi does best is to connect pools of capital and, in a way, the world is playing to that strength,” said Slaughter. “A third of our profits for last quarter came from this region. This is a critical region for Citi.”

To see the digital version of this report, please click here.