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Emerging Markets

Santander plots Asia expansion, CCB joint venture

Europe’s largest bank by market capitalisation intends to add more offices in the region and hopes to finalise a proposed rural bank joint venture with China Construction Bank soon. It sees opportunities in helping Asian companies conduct finance in Latin America in particular.

  • 05 Nov 2010
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Banco Santander plans to open more offices in Asia, become a top three bank for a select set of regional clients, and finalise a rural bank joint-venture with China Construction Bank, according to senior executives at the Spanish lender.

Meeting journalists yesterday (November 4) in Hong Kong while on a regional marketing trip, Juan Inciarte, senior executive vice president for strategy, said that Europe's largest bank by market capitalisation wants to expand into the region “because we follow our customers, and they are increasingly coming here”.

Santander thinks that it can play a role advising and financing the increased trade flows between Asia and Latin America in particular. To facilitate this it will upgrade its representative offices in Tokyo, Singapore and Sydney to full branches next year.

“Santander has grown tenfold in the last 20 years, but it’s hard to imagine it continuing to do so unless we are in Asia,” said Juan Manuel San Roman, newly appointed chief executive officer for Santander Asia-Pacific.

He predicted that income from the region would grow at double the rate of other parts of the world, gradually increasing the market share of Asia in Santander’s overall balance sheet. Meanwhile Adolfo Lagos Espinosa, head of global banking and markets for Santander, predicted that global banking and markets revenues from Asia would double every three years.

While impressive growth, it’s unlikely to make much impact in Santander’s balance sheet for some time. The bank groups Asia into a ‘Rest of World’ category in terms of its financial results, and this grouping only makes up 4% of its overall revenues.

Santander’s key Asia focus is China. As a result Roman will be based in Beijing, despite the bank’s regional head quarters being Hong Kong.

“We thought that initially it would be better if I was based near China’s decision makers and regulators,” he told asiamoney.com. “Perhaps in a few years I will move to Hong Kong, the regional hub.”

As part of its push to grow in the mainland Santander has been in extensive discussions with China Construction Bank (CCB) over setting up a rural bank joint-venture (JV).

The plan is for the JV, in which Santander will be a minority shareholder, to establish a network of 100 rural banks across the country to reach people based in smaller cities and towns.

The JV will initially have €500 million (US$709.8 million) of capital to spend on these JVs, but Roman said that once additional minority shareholders are included in each operation the end capital is likely to be double this sum.

While Santander has signed a number of agreements with CCB over the JV it has not yet signed a definitive agreement with CCB or received final approval from China’s State Council. However Ramon said that the China Banking Regulatory Commission has passed the two banks’ joint proposal to the country’s highest regulatory body.

Even when established the JV is likely to take several years until it begins to make money, so for the coming few years Santander will focus more on building revenues from trade finance, foreign exchange, and corporate and investment banking activities between Asia and Latin America or Europe.

As part of these plans Santander intends to set up a major foreign exchange operation in Hong Kong, which will initially trade G10 currencies and some Asia currencies. Lagos said the bank does not have immediate plans to offer renminbi settlement services, although this could change if clients demand it.

However the bank does intend to conduct some investment banking advisory work. Lagos said that Santander was unlikely to become a major league table participant, but he noted that it could participate in various forms of lending, and also advise Chinese resources companies on potential Latin American acquisition targets and helping to finance them.

He added that Santander will target a group of key clients, likely 60 to 70 in number, which focus on trade between the two regions, and “aim to become one of their top three banking partners. As you know, only the top three banks tend to make much money from corporates”.

Inciarte admitted that Santander has no immediate plans on how to grow in India, partly because the country does not as yet possess the same levels of trading flows with Latin America as China does, and that therefore its existing clients to do not do as much business there.

  • 05 Nov 2010

Bookrunners of International Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
1 HSBC 66,677.92 399 10.15%
2 Citi 65,903.33 324 10.03%
3 Deutsche Bank 62,123.51 299 9.45%
4 JPMorgan 57,926.10 280 8.81%
5 Bank of America Merrill Lynch 37,734.03 215 5.74%

Bookrunners of LatAm Emerging Market DCM

Rank Lead Manager Amount $m No of issues Share %
1 HSBC 6,221.38 14 11.59%
2 JPMorgan 5,140.67 18 9.58%
3 Bank of America Merrill Lynch 4,497.27 18 8.38%
4 Deutsche Bank 4,264.56 14 7.95%
5 Credit Suisse 4,132.73 8 7.70%

Bookrunners of CEEMEA International Bonds

Rank Lead Manager Amount $m No of issues Share %
1 Citi 7,103.94 21 0.00%
2 JPMorgan 6,391.69 17 0.00%
3 Barclays 5,235.31 11 0.00%
4 Deutsche Bank 4,325.08 11 0.00%
5 HSBC 3,388.08 11 0.00%

EMEA M&A Revenue

Rank Lead Manager Amount $m No of issues Share %
1 Goldman Sachs 184.87 44 12.87%
2 Bank of America Merrill Lynch 96.40 30 6.71%
3 JPMorgan 94.14 45 6.55%
4 Deutsche Bank 89.92 33 6.26%
5 Lazard 84.17 46 5.86%

Bookrunners of Central and Eastern Europe: Loans

Rank Lead Manager Amount $m No of issues Share %
1 ING 382.49 5 8.60%
2 Commerzbank Group 292.65 4 6.58%
3 UniCredit 275.33 3 6.19%
4 SG Corporate & Investment Banking 271.81 3 6.11%
5 Raiffeisen Bank International AG 207.65 3 4.67%

Bookrunners of India DCM

Rank Lead Manager Amount $m No of issues Share %
1 Standard Chartered Bank 1,142.00 13 0.00%
2 AXIS Bank 1,096.97 30 0.00%
3 Deutsche Bank 1,016.41 16 0.00%
4 Barclays 699.87 9 0.00%
5 Trust Investment Advisors 698.72 32 0.00%