UOB group beefing up its investment banking team

PHOTO: UOB group beefing up its investment banking team

It may be a little late to the party but United Overseas Bank (UOB) has been building up its investment banking team over the past 18 months to offer debt capital market services and financial advice to its legions of local and regional clients.

According to Ronny Chng, UOB managing director and head of group investment banking, many Asian companies have grown more sophisticated and, as they expand abroad, require more than just bank loans.

Besides being a lender to small and medium enterprises (SMEs), UOB is now able to help customers access the burgeoning debt market, he said.

"The basic philosophy of the bank has not changed, we're very focused on customers," said Mr Chng in a recent interview.

"As Asian companies become larger and more sophisticated, so too have their financing needs and growth ambitions," he said.

More SMEs are tapping bond markets to fund their expansion and to reduce concentration risks, he said.

"Recognising this, UOB started expanding its investment banking product capabilities about two years ago to support our SME and corporate customers as they grow."

The investment banking team, which has more than 50 people currently, has grown by around 30 per cent over the past five years, he said.

Some customers have been with the bank five generations and UOB wants to use the relationship to offer value-added business, which is the role of the team, he said.

Customers no longer only require loans. Their requests now range from raising equity and bonds to cash management services, he said.

UOB set up its Singapore debt capital market desk 18 months ago, followed by Thailand 12 months ago and Malaysia six months ago.

It is looking to expand the coverage to Indonesia and Hong Kong, he said.

This year, it handled 24 deals versus nine in 2011 in the SGD debt market, raising over US$2 billion (S$2.44billion) worth of bonds.

"We have gained ground in the Singapore bond underwriting business. From ground zero 18 months ago, we have grown our market share to 7 per cent today," he said.

The size of the bond issues ranged from US$50 million to US$600 million.

UOB has also helped foreign companies raise funds in the local bond market.

It handled Hong Kong's Cathay Pacific 5-year US$50 million 3.25 per cent issue in January and in February it helped Henderson Land sell 5-year US$200 million 3.65 per cent bonds.

The largest player in the local bond market is DBS Bank, which has a 34 per cent market share year-to-date.

The local bond market has surged, gaining almost 50 per cent this year, making it very competitive with more banks putting in resources.

Mr Chng is not fazed and lists UOB's competitive advantages.

"We are unmatched in our regional network and strong balance sheet," he said.

UOB has 506 branches - 75 in Singapore, 47 in Malaysia, 14 in China, 214 in Indonesia and 156 in Thailand.

Another area of focus for the investment banking team is offering advice on mergers and acquisitions, he said.

Intra-Asian growth is very strong, and many South-east Asian companies are merging and making acquisitions, he said.

There have been US$53.1 billion worth of deals in South-east Asia from Q1-Q3 2012, up almost 30 per cent on year.

Thai companies have dominated the M&A space, logging up a total of more than US$15 billion, year-to-date.

China companies buying into South-east Asia so far this year have totalled more than US$4.5 billion.

UOB is having a plum seat in Singapore's most high profile takeover battle; it is the lead financial adviser to Thai conglomerate TCC group in its general offer of Fraser and Neave. The offer at US$8.88 per share, values F&N at over US$12.6 billion.

On his team's revenue contribution to the bank, Mr Chng declined to comment other than that "IB is here to help earn fees and improve the ROE (return on equity) of the bank".

UOB's fee income, which includes investment banking fees, rose 13 per cent to $1.1 billion in the first nine months of the year.