Credit Suisse’s acquisition by rival UBS will leave a decent pie of equity dealmaking opportunities in Southeast Asia to American peers, after years of regional dominance by the crumbling Swiss bank.
Back in late 2009, when the world was recovering from the Global Financial Crisis, Vietnam priced its maiden USD-denominated convertible bond, a modest USD 100m note offered by Vincom Joint Stock Company, to overseas investors eager to get exposure to Southeast Asia.
The deal, at a time when Vietnam's gross domestic product was barely half today's, may not have happened without sole bookrunner Credit Suisse.
Broadly speaking, Southeast Asia owes Credit Suisse for initial access to overseas investment monies in the last 14 years. Since 2009, Credit Suisse has helped Southeast Asian issuers print 265 equity capital markets deals, raising approximately USD 40bn, giving it a dominant market share of 9.2% by deal volume, based on Dealogic data.
Malaysia's CIMB Group came in second, with a 7.6% share. UBS, which has agreed to take over its rival Credit Suisse under a government-orchestrated deal to avoid the latter's systemic collapse, took the third place in the podium, commanding a 6.6% share in Southeast Asia's ECM market, Dealogic shows.
Within Southeast Asia, UBS's presence in Thailand and the Philippines is decent while Credit Suisse is strong in Singapore, Malaysia, Indonesia, Vietnam, so a combination of the two banks will be complementary, said a Singapore-based investment banker.
Most of CS mandates - be it ECM or M&A - will likely be transferred to UBS post merger since some Credit Suisse bankers may find a home within UBS eventually, he suggested.
"But in an event of the client not being comfortable, they can bring in another bank," he said. Hence a UBS-Credit Suisse combination may open up business opportunities to other players, especially American banks such as JPMorgan, Morgan Stanley, and Bank of America.
For most Southeast Asian deals, they likely already come with a local investment bank and naturally they need a global bank to help bring in overseas investors. If the global bank happens to be Credit Suisse, issuers will likely look for another advisor now if unsure whether the original Credit Suisse banker is staying with UBS.
Issuers may turn to US banks first as they help with profile and access to more overseas investors, which then leaves little room for regional banks. "Why would they need two local monkeys?" he said.
Chances for regional banks to up their game by poaching Credit Suisse bankers are relatively slim given a pay gap that could be as wide as 50% if not more. "We can't afford them," he said.
That said, the banker reckoned, it's time for every bank to revisit their deals in the pipeline involving Credit Suisse to see if there's room to win a role.
Elsewhere in Asia, Credit Suisse's businesses are overall less prominent, though the house's strength in technology coverage did help it secure some high-profile American Depositary Receipts (ADR) listings of Chinese technology companies, a rival banker in Hong Kong acknowledged.
According to Dealogic data, from 2009 to date, Goldman Sachs topped the Asia ECM league table with a 9.4% share, pricing 1,117 deals for USD 281.3bn, followed by Morgan Stanley's 8.95% share, and UBS's 7.07% share, while Credit Suisse came in at No. 8 with a 4.34% share.
A long-time convertible bond investor said Credit Suisse's corporate base, high-net-worth network and sales/trading franchise have all worked together well to make it a deal powerhouse.
"They are not afraid to deal with clients, always aggressive, and keep pushing the envelope," he said.
It remains to be seen who will take over the opportunities left up in the air by Credit Suisse, between American counterparts, regional bankers and UBS itself, seen in the market as a more conservative player.
While CS's impetus led to its strong Asian footing, in unsettling times, slow and steady may win the race.
