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ATR Kim-Eng named Best Local Investment Bank in the Philippines by Finance Asia


2002 Country Awards - Best Local Banks, Investment Banks and Brokers By The Editors of FinanceAsia.com Ltd 28 June 2002

In the first of our two part country awards, here we present the best local banks, investment banks and brokers.

Australia
Best local bank - Commonwealth Bank
Like peas in a pod, Australia's big four banks dominate the commercial banking market. NAB lays claim to the biggest share of retail account holders, Westpac has cornered the corporate end of the market and ANZ runs an enviable investment banking business. But this year the achievements of the Commonwealth Bank have impressed our judges most. With total assets in excess of A$320 billion it is an institution to reckon with, but more importantly it appears to be expanding its business into new markets.

The June 2000 acquisition of 100% of Colonial Limited - a life insurance, banking and funds management group - has diversified the bank's revenue base significantly. Colonial has operations in Australia, New Zealand, the UK and throughout Asia and the Pacific. It manages a total of A$77 billion and has doubled its penetration in the growing superannuation market with Colonial First State Investments up by 23% in the 2000/2001 financial year.

The shift into funds management is a trend that all commercial banks in Australia are following as low margins due to low interest rates impact the bottom line. The Commonwealth Bank now plans to export this expertise to North Asia where it is wants to market life insurance and funds management products to the mass affluent customer segment. The bank's other innovation is the continued success of CommSec, its online broking division. CommSec process around 7% of daily trades on the Australian Stock Exchange, the largest online broker by transaction volume.

Best Local Investment Bank - Macquarie
Macquarie is fiercely competitive and leads the market in so many disciplines that it is nearly impossible to summarise in a few words. Alan Moss, the bank's CEO, oversees a number of fiefdoms run by gung ho executives competing with each other for clients and kudos. The result is a well-oiled machine that generates record profit from diversified sources.

Macquarie has been involved in the largest Australian IPO for three consecutive years holding a lead position in the listing of NRMA in 2000, Austereo in 2001 and Macquarie Airports in 2002. On the debt side it lead managed close to A$2.5 billion of primary market MTNs in 2001. And its 355-strong corporate finance team advises on the country's biggest mergers & acquisitions, divestments, privatizations and corporate restructurings. This has included work for Brambles and GKN (deal value A$19.8 billion), Normandy Mining (A$5.1 billion), Baycorp Holdings (A$1.5 billion), and Independent News & Media (A$1.2 billion). But Macquarie really excels in its innovative approach to specialist funds having raised several billion dollars in wholesale infrastructure and airport funds. This year will see the launch of a communications fund following the A$850 million acquisition of NTL, Australia's national broadcast transmission infrastructure. And when the firm is not innovating, it is winning accolades for being the best shop in town to work for, ranking number two in a poll of best employers run by the Sydney Morning Herald newspaper.

Best Local Broker - JBWere
With fund managers consistently directing their commission to the brokerage with the strongest research, it is no surprise that JBWere is still on top of the heap in Australia. JBWere is the country's leading full-service broking house covering the institutional end of the market, private client and high-volume discount retail. The wholly-owned domestic firm claims a 9.8% share of all trades putting it in the top three with two other foreign powerhouses. But says JBWere, unlike its foreign competitors only a small amount of this volume is proprietary trading and if these trades were removed the firm's share of client business would be as high as 13.5%.

Fund managers prefer JBWere because of the strength of its research which is distributed in a series of daily, weekly and monthly reports and bulletins. Its strategy calls are second to none. The bulk of this research is distributed online and the firm is now making tracks in the interactive arena with the ongoing success of Were OnCall, a phone and internet broking offering for retailers providing research, limited advisory services and discounted broking fees. While JBWere's brand is strongest on Australian soil, the firm has a long-standing presence in overseas markets and claims to generate about 40% of its commissions from offshore clients.

China
Best local bank - China Merchants Bank
Companies and businessmen in China usually have two banks, consisting of one of the Big Four state banks and one of the smaller, private banks. The state banks still dominate the banking landscape, especially through the sheer range of their branch networks and their services. But the private banks, of which China Merchants Bank (CMB) is the foremost example, represent the future of banking in China. CMB is untouched by scandal, highly profitable and carried off an impressive
stock market listing at the end of last year. Customer testimonials bear witness to the speed and efficiency of its services, and they especially pay tribute to its sophisticated technology. The best known examples of the latter are its All-In-One Card, and its comprehensive internet service, All-In-One Net.

Although traditionally at the heart of the Pearl River Delta, one of the most thriving and entrepreneurial economic zones in the world, CMB's national and international growth has been noteworthy, from its 293 offices all over the country to the imminent opening of its Hong Kong branch and a representative office in the US.

At end-2001, total assets reached Rmb266.32 billion ($32 billion), up 21% on-year, while bad loans were down to 8.15% , a 3.1% decrease, and pre-tax profits were Rmb2.11 billion. CMB is looking the best-prepared of China's banks to deal with World Trade Organization entry, because everything it does is aimed at achieving parity with world leaders - being the best domestic bank is not enough. That realization is widespread amongst the management of this promising bank.

Best local investment bank - CICC
Although the investment banking scene is beginning to crystallize in China, few houses have come up to the level of China International Capital Corporation (CICC). Helped by rock solid government support and early infusions of cash and technology from its co-founder Morgan Stanley, CICC continues to lead the pack. It is the only Chinese investment bank which comes anywhere close to international levels of deal execution, both domestically and increasingly internationally. CICC is a visionary creation, and it has paid off with commanding advisory positions in strategic areas such as telecommunications, power,
oil and gas, as well petrochemicals and the finance industry. CICC has arranged more than $31 billion in equity and $3.5 billion debt financing to date. In the past year, it's been involved in the Rmb11.82 billion A-share offering of Sinopec in July 2001 - at the time the largest IPO in Chinese financial history. It has also been involved in the IPOs of Alcoa, China Merchants Bank, China Shipping Development. On the bond side, the company lead managed China Mobile (Hong Kong)'s Rmb5 billion corporate bond issuance in June last year. In Mergers & Acquisitions it helped Baoshan Iron & Steel, China's largest steel maker, COFCO asset restructuring, and advised China Petroleum and Chemical Corp's acquisition of National Star. It's widening international reach is reflected in its Hong Kong subsidiary, China International Corporation (Hong Kong) which offers investment banking,
sales & trading and research.

Best local broker - China Galaxy Securities
Since the end of last year, the stock market environment has not been good in China either for the financial institutions or for the investors. Government policies on selling off state shares have led to a slump since the second half of last year, which in turn has caused trading volumes, and hence brokerage fees to dry up. However, credit must go to China Galaxy Securities for the way it is pressing on with extending its market share in this tricky area. The timing of this policy is clearly appropriate: China's dozens of small-scale brokerages are on the ropes. Galaxy is showing its foresight by using the weakness in the industry to grab as much market share as it can. In the first four months of this year, the strategy paid off, with Galaxy securing the top spot in the brokerage industry.

Galaxy, which employs 5000 staff at its Beijing headquarters, and has 177 outlets across 29 provinces, raked in Rmb650 million on the back of its brokering and underwriting activities in 2001. Although it's easy to underestimate brokerage activities as being low valued added activities, their importance to the nascent Chinese securities firms is still immense, with brokerage activities accounting for more than 80% of total turnover of the top ten brokerage firms. A large proportion of their profits come from this sector and the funds and clients thus accumulated will be an important resource for stepping up to the next level of an integrated investment bank.

Hong Kong
Best local bank - Hang Seng
Most years it seems like a bit of a no brainer to give this award to HSBC, which is the biggest bank in the territory. However, in a year in which HSBC seems to be closing about a branch every week, we decided to look more carefully at a few other options. Its subsidiary, Hang Seng Bank, we concluded is a very local bank with a very local focus, and while not of equal scale to HSBC, it still serves one third of the population.

All in all, we concluded, Hang Seng is one of the best local banks in the whole of Asia, and depending on which day you look, jostles with Korea's Kookmin for the mantle of possessing the biggest market cap of any bank in the region (excluding Japan). For the second consecutive year it made attributable profit in excess of HK$10 billion ($1.28 billion) and in a very difficult environment for Hong Kong banks it even achieved a 1% profit increase. Attributable profit per employee at HK$1.35 million was also a record.

Indeed, Hang Seng's numbers cannot fail to impress. Its average return on shareholder funds rose to 23% from 22.7%. And while loans and advances in Hong Kong declined 11.2% for the banking industry as a whole - leaving many local bankers bemoaning their lot - Hang Seng increased its loans and advances by 2.3%.

This is a bank run to the highest standards and its share price reflects this. From July 1, 2001 to June 7, 2002, it achieved a total return of 15% for shareholders, which compared favourably to a negative average return of 11% by Hang Seng index constituents over the same period. Little wonder that of the 21 equity analysts that cover the bank, 43% had buys on the stock and 38% had holds.

Best local investment bank and local broker - ICEA
ICEA is a highly successful local player that has proven time and again that it can select and bring to market the best performing IPOs in Hong Kong. The 450-strong staff of ICEA have built up a track record of small and mid-cap IPOs that sets it in good stead. Its HK$592 million ($75.8 million) deal in July for Euro-Asia Agriculture was up 53% by June 2002. Its HK$101 million IPO for Golden Meditech in December is up 150% from the IPO price. Thinsoft Inc, which it led in February, is up 70%. Its placing power has the impressive quality of a true broker. When Chaoda Modern Agriculture wanted to do a secondary offering of HK$736 million worth of shares in November, ICEA placed the deal in three days. What sets ICEA apart is the breadth of its placing power. It has the network of branches you would expect to access Hong Kong retail and the saleforce to penetrate institutional clients. But perhaps what gives it the edge is its network of around 500 high net worth individuals from Mainland China. There are 50-60 of these who have put in orders of HK$10 million each on IPOs and in the case of one IPO, a lead order of HK$50 million. These people are predominantly the new entrepreneurs of China and they often have a better understanding of the companies being listed - thanks to their own information networks - than institutional investors. They have got richer thanks to buying IPOs that ICEA has brought to market, making the relationship between bank and client highly beneficial to both, and almost akin to a form of private banking. ICEA's research has helped it to make some very sound calls too for its clients. On December 13th it issued a buy on ASM Pacific Tech when the stock was trading at HK$15.90, and put a target price of HK$18.50 on the stock. The stock traded to HK$22.35. In June it issued a report on Xinao Gas when it was trading at HK$1.47. The price peaked at HK$3.50. In ICEA's pitch to FinanceAsia it included 24 detailed examples of good buy and sell calls it made.

On the M&A side it has managed to win a variety of China-related mandates, such as independent financial advisory roles on China Southern and China Eastern airlines asset acquisitions. This all adds up to a pretty smart operation. Little wonder that its return on equity after bonus and tax between January and May 2002 was 33%.

India
Best local bank - HDFC Bank
HDFC Bank remains one of the gems of the Asian banking scene. In 2002 it increased its total assets from Rs156 billion ($3.19 billion) to Rs238 billion and increased its cash management throughputs to Rs1.4 trillion. Its trade finance volumes also surged to a record Rs145 billion. On the retail banking side it has always focused on the 40-50 million high networth and middle class Indians and has consistently sought profitable market segments as opposed to gaining market share for market share's sake. Its successful acquisition of Times Bank means it now has 171 branches and 479 ATMs (the latter is double the number for 2001). The financials speak for themselves, and tell you why HDFC Bank has always been so popular with investors. Its total income this year was up 50.9% to Rs20.4 billion, and its net profit was up 41.4% to Rs2.9 billion. Its total deposits also increased 51%. It is difficult to remember sometimes that the bank is a mere seven years old. But this is a bank that has got used to fast growth and under the leadership of the dynamic ex-Citibanker, Aditya Puri has proven time and time again that it is ready to meet challenge after challenge. It is little wonder when the bank listed its ADRs in New York last July the offer was seven times oversubscribed and garned $1 billion of demand.

Best local investment bank - DSP Merrill Lynch
DSP Merrill Lynch, the joint venture between Hemendra Kothari's DSP and Merrill (which owns 40%), achieved its best financial performance last year seeing profit after tax of Rs910 million ($18 million). This corresponds to a return on equity of 37.3%. In the period between July and May it raised Rs18 billion in new equity offerings, including joint-leading the highly successful ADR for HDFC Bank; the IPO for Punjab National Bank and the highly successful IPO for Bharti Televentures, which was Rs8.3 billion. The latter stands out as the first 100% domestic bookbuilt issue in the local markets.

In weak equity markets, DSP Merrill was also active in helping corporate clients engage in buybacks from the market (valued at Rs16.2 billion) and was engaged in 11 open offers. In the period under consideration it completed 15 M&A deals worth Rs44.5 billion. This included the merger of ICICI and ICICI Bank to create an entity with $20 billion in assets, and the largest deal in the Indian pharmaceutical industy, the acquisition of German Remedies by Zydus Cadila.

In the debt markets it led 224 private placement debt offerings worth Rs92.5 billion, placing it just behind market leader, SBI Caps. In June 2002 it also placed Rs1.56 billion of mortgaged backed securities on behalf of HDFC, the largest deal of its kind.

On balance, DSP Merrill is active in all three areas of Indian investment banking (equity, debt and M&A) and provided us with a number of excellent testimonials from its corporate clients that showed they were highly satisfied that they had selected India's best local investment bank.

Best local broker - JM Morgan Stanley
JM Morgan Stanley has one of the strongest retail and institutional distribution reaches in India, with 11 retail broking offices, over 6000 sub-brokers and a 24% market share (according to Autex Block Data) of the trading of institutional investors.

This deep penetration showed with the Cadbury open offer, where the 90% delisting threshold was reached on the first offer. This was achieved via contacting 49,000 individual investors and ensuring that 28,000 tendered. In the case of the I-flex IPO it garnered 3723 applications and ensured that the retail portion was 2.68 times oversubscribed. Its equity research team under Ridham Desai remains a market leader in India and in total it covers 48 companies with a total market capitalization of Rs73.6 billion ($1.5 billion). Its big research calls included, as it put it, "pounding the table" over Associated Cement Companies in September last year (20% market outperformance); continuing to advise clients to buy HDFC (outperformance 50%); and initiating coverage on Nalco at Rs46, and making it the firm's best pick in the metals sector (the stock doubled in the ensuing six months). All in all an excellent year for a truly excellent broker.

Indonesia
Best local bank - Bank Mandiri
With a 24% market share and six million customers, Bank Mandiri is Indonesia's largest bank by a solid margin. Its total assets are Rp262 trillion ($26.5 billion) and its net profit is $119 million. Its return on equity is 38.09%.

Slated for an IPO this year, Bank Mandiri will become the proxy for international investors who want to buy Indonesia Inc. It has already proven a darling of the market with a highly successful $125 million eurobond, which marked the first international capital markets transaction by an Indonesian state-owned entity since the economic crisis.

The bank's strategy is to develop electronic banking channels, engage in bancassurance and to improve the bank's anagement information systems through investment in new information technology systems - the latter being scheduled for completion this year.

With a cost to income ratio of 29.27% it is one of the most efficient banks in the whole of Asia, and it is hoped that Mandiri can continue to capitalize on its early promise and succeed in its mission to be Indonesia's national champion and a universal bank par excellence. Best local investment bank and local broker - Danareksa. There are certain institutions around the Asian region that have an indisputable lead in their national market, and Danareksa is one of them.

In the field of bond underwriting it has a market share of 82% having underwritten Rp1.9 trillion of debt in 2001. In 2002 it joint led a Rp400 billion ($46 million) deal for PT Jasa Marga and is leading a Rp1 trillion issue for PT Telkom and a Rp300 billion issue for Matahari. It has also branched out into the area of asset backed securities via the issuance of ABSFI Certificates backed by PT Bunas Finance Indonesia's auto loan receivables.

On the M&A front it has been a financial advisor on the sale of BCA and was also active with Indosat, raising $110 million for the government through the sale of 83.5 million shares (an 8.1% stake) in the telco in May. Its equity research is the best among local houses in Indonesia and it has a market leadership position in broking and in equity underwriting.

Japan
Best local bank - Shinsei Bank
At last, a good bank in Japan. The revitalization of the old LTCB and its conversion into Shinsei Bank is testimony to what can be achieved in Japan when sound management adopts normal banking principles. For the longest time the Japanese banking system operated with banking practices that appeared to defy both gravity and common sense. When Ripplewood took over LTCB, it immediately sought to turn the newly named Shinsei into a international-style bank, and accordingly hired Masamoto
Yashiro to run the bank.

In short order, the ex-head of Citibank in Japan created a revolution. He hired foreign talent such as Brian Prince from Lehman Brothers to run the financial engineering group. He introduced a merit system of employment that overturned age-based hierarchies. He brought in Indian computer systems professionals from Citibank to overhaul the bank's dismal IT and create new improved systems. Using these new systems it entered the field of retail banking, diversifying its business. It innovated even here, opening branches till 7pm. It is proactively going after high net worth individuals as clients.

Foreign bank analysts rave about the transformation of the bank, which is expected to list at the end of this year. The bank is cutting credit lines to bad risks and like a Western bank has become involved in credit and loan trading.

This new look, sensible banking approach has raised some hackles among politicians in Japan, and the FSA has even made a statement that because the bank is owned by a fund (Ripplewood) it no longer considers its 'social responsibilities' in its lending practices. Despite the criticism, Shinsei's management has stuck to its task and continued to practice 'banking 101'.

Best local investment bank and local broker - Nomura
There is a number that needs to be stated at the outset when we refer to Nomura and its relative size in Asia as a whole. It dwarfs all its rivals in terms of profit, making Y102.8 billion ($841 million), on operating revenue of Y1.1 trillion. It also has the largest shareholder's equity, at Y1.7 trillion, of any of the Japanese players. It has a market capitalization of $35 billion, making it one of the world's largest investment banks by value.

It has the largest market share in leading samurai bonds, which is no surprise considering it has Y27 trillion of retail assets under custody and has 124 branches to distribute through.

In the past two years it has raised $24 billion of equity for its clients, lead managing 52 transactions. In the period under
consideration it led the two most successful deals, for Dentsu in November (Y56 billion) and for NRI in the same month (Y149 billion). The latter, for Japan's largest consulting company, was the largest IPO from Japan in 2002 and saw 42% of demand come from Japanese retail, with average order sizes exceeding $30,000. It is important to bear in mind that Nomura's retail distribution is probably second to none, with 3.3 million accounts and around 50,000 high net worth individuals who have more than $1 million in Nomura accounts.

The Dentsu and NRI deals were also among the best performing deals of the period, with NRI up 46% and Dentsu up 69%, leading to increases in market value for the companies of respectively Y69 billion and Y39 billion.

Once again, Nikkei Financial Daily named Nomura the best investment bank in Japan in 2002. Its presence in M&A continues to grow - in 2001 it was involved in transactions worth $65 billion. Its research capabilities are still considered formidable and it has 9.2% of the turnover of the Tokyo stock exchange.

Korea
Best local bank - Kookmin
What a bank! Formed out of the merger with H&CB, Kookmin is now one of Asia's great banks and is undoubtably the national champion of the Korean banking sector. Regarded as a strong buy by UBS Warburg, called the 'sturdiest craft' by HSBC Securities, and a buy with CSFB, it has, put simply, created value for its shareholders. On July 1 2001 its stock price was W29,100. By June 2002, it had doubled to W62,700. All Korean banks have benefited from a rising stock market, but the increase in Kookmin's worth has been the most pronounced by a large margin. Its current return on equity is 19.19%, one of the best in Asia. UBS Warburg estimates its year end ROE will be 26%.

The long term strategy of the bank is to be the leading bank in Korea and a world class provider of financial services. It wants to be the bank of choice for retail clients and small and medium-sized enterprizes. In the latter, only IBK comes close to it market share. It already dominates the Korean mortgage market. Numerous other banks in Korea will spend the next two years in mergers. Kookmin is the finished article, and the bank can only go from strength to strength.

The placement of its ADRs also shows that this is a bank that wants to be benchmarked against the best in the world and not just Korea.

Best local investment bank - Samsung Securities
Samsung Securities continues to impress, and shows little sign of giving up this particular FinanceAsia award. With over W5 trillion in total assets and 2,5000 staff it is not only the best local investment bank in Korea, but also the largest. It has a market capitalization of around $2 billion.

In the period under consideration it has lead managed W6.8 trillion ($5.7 billion) of domestic and international IPOs and W13.6 trillion of domestic bonds. These equity lead management positions include roles on the GDR of Korea Tobacco & Ginseng, the ADR of Koram Bank and the recent massive domestic privatization of KT Corp.

It can also claim the honour of having sold 100% of Korea Cold Storage on behalf of the government in December 2001 for W26 billion. Samsung Securities is the top debt underwriter for 2002 so far, with W3.9 trillion successfully placed.

Another great year for the Korean powerhouse.

Best local broker - Good Morning Securities
What a great investment Good Morning Securities proved for private equity firms H&Q, Lombard Investments and GIC. Earlier this year they sold their controlling stake in what used to be Ssanyong Securities to Shinhan for $300 million. That has earned all of them an internal rate of return of 60%.

Little wonder Shinhan was so keen to buy this gem in the brokerage field. With a well recognized brand and a market share of around 5%, Good Morning has deep penetration of both institutional and retail clients. An internet strategy aids the latter.

Its research has earned it plaudits. Many have commented on some of the excellent work it has done on the DRAM industry. Moreover, JungWon Sohn's insightful piece on September 5 on Hyundai Motor was spot on. At the time of publication, Hyundai Motor traded at W22,000 and Sohn put a six month price target of W37,400 on the stock. This confident call proved prescient with the stock hitting W35,800 by the beginning of March, and broke the W50,000 range in May.

Similarly with SEMCO, which Tony Jung upgraded to a buy in a report in November when the price was W29,950. Jung forecast that restructuring efforts would pay off in 2002 and said there was 87% upside in the next six months, forecasting a price of W56,000. By April 1, the price was up even more dramatically to W76,507.

Excellent research. The mark of a great broker.

Malaysia
Best local bank - Public Bank
Only Manchester United have won more titles than Public Bank. This is the fourth year in a row that we have awarded the well managed Malaysian bank our award. We think Salomon Smith Barney sums it up best when it refers to Public Bank as a low risk outperform. The Public Bank Group last year made profit before taxation of M$1.2 billion ($333 million), which was 0.7% up on a year earlier - a stunning achievement when its leading competitor saw a fall in profits of 29.4%. Its return on pre-tax equity was 19% versus an industry average of 14.5%.

With its continued focus on conservative growth, and serving the needs of the more entrepreneurial parts of the Malaysian economy, Public Bank is likely to rise with the Malaysian economy as a whole. It increased its loan portfolio by 10% in 2001, a sure sign of its early confidence in the renaissance of Malaysia Inc.

It has a buy recommendation from 16 brokers including Fox, Pitt-Kelton, CSFB, Salomon and JPMorgan. In the period under consideration, it outperformed the KLCI Index by 11.53%.

The measure of any good management is how well it absorbs acquisitions and the manner in which it has integrated Hock Hua Bank is a testimony to Public Bank's strength in this respect. Public Bank may not be as big as MayBank, but like the hordes of equity analysts who follow the stock, we are, as ever, convinced of its excellence.

Best local investment bank - CIMB
CIMB continues to be the leading player in the local investment banking scene. It has sponsored 13 out of 41 new listings on the Kuala Lumpur Stock Exchange, and raised M$2.5 billion in equity funds via these IPOs and four rights issues.

It thus has a market leading 41% share of the IPO league table, and can say that it ran the domestic tranche on the biggest most successful IPO in Asia this year, for Maxis.

On the M&A front it advised on the acquisition of POS Malaysia by Phileo Allied, and on the takeover of Malaysia British Assurance by Allianz, where it advised the latter. CIMB advised on M&A transactions totaling M$4.7 billion since July 2001.

Historically, CIMB's great strength was in the debt market, and that shows no sign of abating. In the period under consideration (July 2001 to June 2002), CIMB originated a total of M$3.8 billion of bonds. It topped the 2001 league table.

All in all, CIMB continues to grow its impressive franchise, and cement its dominant position.

Best local broker - RHB Securities
RHB Securities has a long and successful pedigree and thanks to the quality of its research, it has been the most successful local house at winning the business of foreign fund managers. Indeed, with Malaysia coming back into favour internationally, this strength has come to the fore once more. Post-crisis, RHB had adopted to a 20/80 foreign versus domestic client split, but in the last six months it has seen its ratios reverse to 55/45.

Its brokerage market share is around 8% of daily turnover, but if off-market placements and transactions are included, its market share is closer to 15%.

It was early to call the revival of the Malaysian stock market, putting out a very influential piece of research in May 2001. The KLCI at this point was at 550 and this report called for clients to move into banks, construction companies, and the gaming and plantation sectors. Top picks were Gamuda, Genting, IOI Corp and Hong Leong Bank.

RHB Securities has 11 key research personnel. Their calibre is perhaps reflected by the fact that the former head of research, Ooi Sang Kuang has just left to become the deputy governor of the Central Bank.

Philippines
Best local bank - Bank of the Philippine Islands
BPI continues to be the standard of excellence in the Philippines. Its profits for 2001 was Ps5.25 billion ($104 million), which was 72% higher than the year before, and saw a near doubling of the return on equity. In the first quarter the bank made a return on equity of 12.3%. BPI has 709 branches and added 20 branches during the course of the year thanks to the acquisition of DBS Philippines. It also purchased the mortgage and auto loans of ABN AMRO in May 2002 for Ps3.4 billion.
BPI has also rationalized its various subsidiaries after its merger with Far East Bank & Trust Company. For example, in January 2002, it merged its non-life insurance subsidiary FGU Insurance with FEB Mitsui Marine and the merged entity is now known as BPI/MS Insurance Corporation, and is 51% owned by BPI and 49% by Mitsui Sumitomo Insurance. The bank is favoured as a buy by BNP Paribas, Deutsche Bank and ING. In April, Deutsche noted: "We believe BPI is the best positioned among the
banks to take advantage of a cyclical recovery in the Philippines."

Best local investment bank - ATR Kim Eng Capital Partners
Formely a Peregrine JV, ATR was acquired in a 1998 MBO by experienced investment bankers Ramon Arnaiz, Manuel Tordesillas and Lorenzo Roxas - whose initials stand for ATR. It is 43% owned by Singaporean stockbroker, Kim Eng.

Subsequently the shareholder group was expanded to an impressive of array of movers and shakers such as taipan, John Gokongwei, and former San Miguel chairman, Andy Soriano.

In the past 12 months it has completed Ps20 billion worth of investment banking transactions. Its largest transaction was as financial advisor to the Bases Conversion Development Authority (BCDA), a government agency responsible for Fort Bonifacio and Clark Air Base. It set up an auction that was eventually won by Ayala Land, and will create a commercial complex valued at Ps6.7 billion.

Its position in the equity markets was confirmed when it acted as lead manager in April for the Ps565 million IPO of Salcon Power Corp. After an array of dealmaking, the firm's revenues increased 2.4 times and profits surged 11.6 times to Ps65.3 million.

Best local broker - Philippine Equity Partners
Formerly the Merrill Lynch operation in Manila, newly named Philippine Equity Partners is the result of an MBO by Jojo Madrid and Jojo Gonzales and the rest of the highly respected local team. In the year 2001 it topped the brokerage league table with volume of 8.14%. About 90% of PEP's business comes from foreign institutional investors and the reason is that its research is reckoned to be second to none. Jojo Gonzales is one of the most experienced analysts in the Philippines and is widely followed.

A recent example of insightful research includes a report on May 17 arguing that PLDT was undervalued. One month later the Gokongwei Group offered to buy it from First Pacific at 2.5 times market price. The firm's research is still passed through the Merrill Lynch global sales network, but PEP is now an independent boutique outfit whose owners (the staff) come to work each day knowing their destiny and profit are in their own hands.

Singapore
Best local bank - UOB
The banking world has changed significantly in Singapore in the past 12 months. With the consolidation that has gone on, Singapore is now left with three banks, of which UOB has emerged as the biggest local player after its successful merger with OUB.

Given that these mergers were all about shareholder value - which is now the key concept in Singaporean boardrooms - we decided that the fairest way to measure the performance of the banks was to see which ones had created the most value since July last year, when our survey starts. Suffice to say UOB wins on this measure by a substantial amount, having created around S$4 billion of extra value to date. Little wonder then that out of 25 brokers who cover the stock, 18 had buys. The group increased it net profit by 1.3%; and now has the largest loan portfolio for small and medium-sized enterprizes, and is the largest issuer of credit cards, with a market share of more than 30%. UOB has been through its integration process, and now looks to be a bank that has the scale to expand beyond Singapore shores via acquisitions.
Few doubt, that in the long run, this bank wants to play a meaningful role in China.

Best local investment bank - DBS
DBS continues to be an investment banking powerhouse in Singapore. In 2001 it raised S$4.3 billion in the local bond market. The Singapore dollar debt market has been a lot quieter in the first half of 2002, although DBS retains a 9.4% market share. A landmark deal for the bank, however, remains the S$1 billion of bonds it lead managed for SingTel to help finance its acquisition of Optus.

In October 2001, DBS successfully acquired Lum Chang Securities and 60% of Vickers Ballas, one of Singapore's leading brokerages. This created an equity powerhouse too with a combined market share in the IPO market of 58% for the year 2001. Between July 2001 and June 2002 DBS led four IPOs worth S$128 million. This included the largest IPO of 2001 for
China Aviation Oil Corporation. This followed the September 11 incident and was priced in tough market conditions.

In respect to M&A, the firm's roles included advising NatSteel on selling its 51.6% stake in NatSteel Broadway to Flextronics, which could be the largest takeover in Singapore in 2002. In total, DBS advised on S$2.9 billion worth of takeovers in the period since July 2001.

Best local broker - DBS Vickers
The integration of DBS and Vickers Ballas into one brokerage powerhouse has led to cost savings of 23% and a firm that has consistently been in the top two in terms of brokerage volume. The firm has over 200,000 clients, of whom 1,000 are institutional, and 400 of these are foreign fund managers. Its research has become known for discovering underfollowed emerging growth stocks. It has cited top performers like Pacific Andes, Seksun Corporation, Jurong Technologies, People's Food, TPV Technologies, Huan Hsin and Informatics. These stocks have risen between 30% and 125% since the times of the calls. It has also been able to spot inflection points for large cap stocks. A notable sell call this year was Datacraft at S$2.
Notably, DBS Vickers says its research's originality and quality has seen it surge into the top 10 broker document downloads in Thomson First Call research distribution system.

Taiwan
Best local bank - Chinatrust
Taiwan's finance industry has taking a beating. The effects of the 1997 Asian financial crisis were slow to come through, but come through they did. But the changes the crisis has forced onto Taiwanese financial institutions are beneficial, and few have taken the opportunity to improve more eagerly than Chinatrust. These efforts brought results, and the bank's performance in 2001 surprised analysts.

Income before tax amounted to NT$9.13 billion ($268 million), with a return on equity of 10.78% - still far off the levels of, say, Citibank, but very respectable considering the difficulties the bank has encountered. Sensibly striving to improve its capital base, the bank's paid-in capital was increased to NT$48.8 billion. Crucially, the bank has been slashing back traditional lending practices, and replacing them with high-tech and objective standards.

The most impressive aspect of Chinatrust's reforms is that its bad loan ratio has dropped 2.93%, far lower than the island-wide average. The bank is also bravely moving into the vital fee-earning business, and it has the number one position for credit card business in Taiwan. Electronic services are well underway.

The bank is a lead player in the syndicated loans business and among the top three lead managers. Chinatrust is also moving beyond the confines of Taiwan, and has opened up overseas markets, most strikingly Chinatrust Bank (USA) and subsidiaries in the Philippines and Indonesia, with 53 international branches now contributing to the bank's business. Crucial to responding to the World Trade Organization challenge is the transformation of the bank into a financial holding company. With its modern outlook and responsiveness to challenges the bank is well positioned to become Taiwan's flagship financial institution.

Best local investment bank - KGI
With the island facing unprecedented economic pressure, the financial industry has been in the thick of attempts to drag Taiwan into the 21st century. KGI has responded well to the challenge and is now a true investment bank, offering services in research, brokerage, bond and equity underwriting, as well as a well-developed network of online trading services for its retail investors, helping it to grab fourth place. In the year to March 2002, KGI saw its return on equity jump to 15.7% from 13.27% a year earlier, while earnings per share jumped 117%. As Taiwan's capital markets mature, KGI has seen its core base of retail investors shrink from 90.7% in 1997 to 84% in May 2002, while its trading with institutions has risen from 7.6% in the same year to 10.14%. But even as the services it offers increases, head count has shrunk. It currently has 300,000 accounts, reflecting a market share of 3.13% in the extremely fragmented and competitive industry. However, good internal management has ensured that its brokerage operations are top in terms of productivity per site and productivity per trader. Research has been high on the company's list of priorities and good calls abound. Analysts chose CPT in September 2001, and the counter has jumped 482% since then. KGI is anchored within the Koo's Group, one of Taiwan's largest financial conglomerates whose goal is to build the first home-grown retail brokerage network in Asia.

Best local broker - Grand Cathay
Grand Cathay Securities is leading the charge among Taiwanese financial firms. In an era of unprecedented consolidation and shrinking margins, Grand Cathay has secured its status as the island's largest investment market. This is primarily on the back of China Development Financial Holding Corp's share swap with the company. The new entity will benefit from a much bigger share of the brokerage market, lifting it from 0.1% to 2.3%, with the increase accounted for by Grand Cathay. The choice of Grand Cathay was logical, since its market share in Taiwan's fiercely competitive brokerage industry was backed by healthy
financials. Total revenue was almost NT$4.5 billion at end-2001, and earnings per share shot up 132.6% for the same period. In addition, the flagship of the holding company, China Development Industrial Bank is the island's largest investment bank, which should enable Grand Cathay to benefit from cross selling throughout the group and the pooling of capital markets expertise. Grand Cathay's position in the brokerage industry was helped by its early launch of its online services in 1999.
This provides clients with 24-hour round the clock service, extending to trading on the New York Stock Exchange, NASDAQ and HKEX.

Thailand
Best local bank - Bangkok Bank
Bangkok Bank is the largest bank in Thailand with the largest market capitalization and the largest retail deposit base with 10.5 million accounts.

Out of favour since the financial crisis, Bangkok Bank has done much to learn from the mistakes of the past and has this year once again become a favoured choice among investors. In the period of our awards it has increased its market cap by 52% - more than any of it competitors. It has an ROE of 14.39% at the end of quarter 2002, and six out of seven brokerage firms recommend Bangkok Bank as a buy. That's because analysts like Andrew Stotz at SG Securities believe that Bangkok Bank has the best ability to control costs and thus yield gains for its shareholders. The bank obviously still has NPLs, but these have declined 25% over the past 12 months.

And with Thailand finally emerging from crisis and starting to attract investment flows again, can there be a better proxy for the recovery of the economy as a whole than Bangkok Bank?

Best local investment bank - Asset Plus Securities
Asset Plus has cultivated a very successful business in Thailand and has become a leader in the now fast-recovering equity capital markets. With a total staff of 100 it has led major deals in the last six months for Major Cineplex (Bt100 million), ITV plc (Bt1920 million), M-Link Asia Corp (Bt294 million), Bangkok Aviation Fuel Services (Bt540 million), Aeon Than Sinsap plc (Bt 500 million), Home Product Center (Bt270 million) and Cal-Comp Electronics (Bt1332 million). A market cap of Bt 40 billion has been raised since 2001 in Thailand and the pipeline for future deals is huge. Given its track record, Asset Plus is the best place local firm to take advantage of this boom in local ECM.

Best local broker - Seamico Securities
There has never been a better time to be a broker in Thailand and firms which have shown a long term commitment to the Thai market, such as Seamico, are now basking in the sun of increased volumes, fixed commissions and vastly improved profitability.

Seamico benefits from its blend of local and expatriate staff and has a market share of 8%. It is locally-owned and has twice the market share of the next biggest locally-owned broker.

It is also the most profitable listed broker in Thailand, and has seen its own share price increase from Bt13 on October 1 to Bt41.75 on May 31.

Times are good for Seamico. It saw 84% growth in new clients in 2001 and has seen 32% growth of the same in the first half of 2002. It has also seen a 340% growth in its daily average trading values.

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