By Denny Thomas and Lawrence White
HONG KONG, June 28 (Reuters) - HSBC Holdings Plc
leapfrogged investment banking rivals including Goldman Sachs to
land in the top five for Asian M&A advisory for the first time,
boosted by its ability to provide funding for clients and a
string of deals in India and Hong Kong.
The bank moved up the ranks in a dismal deal climate as
market volatility across the globe depressed corporate
acquisitions. Overall, M&A volumes in the region fell nearly 9
percent to $216 billion.
HSBC rose to No.3 in Asia Pacific, excluding Japan, from
No.9 a year ago, according to preliminary data from Thomson
Reuters. It is the best ranking the bank has secured in the
region in data going back more than 50 years.
Morgan Stanley was ranked No. 1 in the Asia-Pacific
ex-Japan league table, working on deals worth $33.1 billion,
while UBS AG was No. 2, advising on $25.9 billion
worth of deals, and HSBC had $21.9 billion, the data showed.
Goldman Sachs Group Inc was fourth.
HSBC, which has been steadily building out its investment
banking platform in Asia since the global financial crisis, has
been able to take market share from some of the traditional Wall
Street banks, helped in part by the large commercial bank that
backs the franchise, according to HSBC bankers and their
First half M&A data, however, was skewed by the drop in
volume, and deal flow usually picks up in the fourth quarter,
when HSBC's place in the top tier of the Asia tables will face a
challenge from the more standard names.
Investment banks have traditionally preferred to be on the
side of the seller in an M&A transaction, since that would
guarantee that their client will participate and therefore pay a
fee in any deal that closes. Banks advising buyers risk their
client losing out to a rival bidder, resulting in the reduction
or loss of their fee.
HSBC, however, operates on a different model, preferring to
chase buyside mandates because of the opportunity its broader
commercial banking platform provides to offer ancillary products
to clients in an acquisition, such as loans and derivatives.
"While we have done some sellside mandates, that work is
very intensive and you only tend to get the advisory fee,
whereas with a buyside mandate you can provide the full package
of hedging, financing and capital markets takeout," said George
Davidson, head of M&A for Asia-Pacific at HSBC.
HSBC hired Davidson, who has worked in M&A for 30 years,
from Goldman Sachs in June 2005 as part of a renewed drive to
improve its investment banking performance.
HSBC is not alone in pursuing this model in investment
banking, with universal banks such as Citigroup, JP
Morgan and Bank of America Merrill Lynch also
keen to exploit lending relationships to sell banking clients a
package of products when they do deals. But after years lagging
its peers in the advisory business in Asia, HSBC's latest M&A
strategy has now paid off in the league table results.