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Soaring convertible bond issuance is a breath of fresh air in an otherwise stagnant Asian market. Volatility, dropping interest rates and retiring supply means we can expect more of the same in the coming year. By Chris Wright.

Citibank and Northern Trust emerged as leaders in this year's global custody poll. But customers still aren't getting everything they want from technology. By Olivia Chow and Robert Law.

Three takeover bids, between them involving Singapore's five largest banks, show that the long-awaited consolidation of Singapore's banking sector is finally underway – with a vengeance. It started in mid-June, when Singapore's third-largest bank, OCBC, made Keppel Capital, the smallest of Singapore's five major banks, a cash offer of S$3.38 per share and S$1.01 per outstanding warrant. That put the company's worth at $4.8 billion and represented 1.7 times its book value.

Despite the slowdown in the financial markets, Asia's financial sector has so far escaped the heavy layoffs and across-the-board cuts that have taken place in the US. Goldman Sachs, Morgan Stanley, Salomon Smith Barney and Merrill Lynch have all slightly reduced Asian staff in the first half "but there hasn't been the level of firings that you would have expected", says one headhunter. Every job is being carefully scrutinized, however. Many firms have effective but (for the most part) unannounced hiring freezes, particularly the large American banks, which are facing pressures back home. And most investment banks in Asia have been quietly weeding out the bottom 5% – though at the same time adding staff in areas where they were previously weak.

The roller coaster career of Chatumongol Sonakul took a new twist on the morning of May 29 when the outspoken governor of the Bank of Thailand (BoT) was unceremoniously fired after refusing to bow to the wishes of prime minister Thaksin Shinawatra. The last straw reportedly was Chatumongol's continued support for the BoT's low interest rate policy, which the government blames for causing capital outflows as well as weakness of the baht. Far from being the only reason, however, bankers claim that the fiery governor's stubborn resistance to outside interference and his refusal to embrace populist new government policies made his dismissal inevitable from the moment Thaksin took office in February. "Chatumongol and Thaksin are chalk and cheese," says one banker. "In the battle of wills, it was only a matter of time before Chatumongol was given his marching orders."

Citic Pacific launched a smart and opportunistic financing in late May when it raised US$450 million in 10-year bonds, increased twice from an initial target size of US$300 million. The issue caught the eye for a number of reasons, among them ownership and earnings questions and the lack of an obvious benchmark. This was the first fixed rate international corporate issue from a triple-B (specifically Baa2/BBB-) credit in Greater China since before the Asian economic downturn, making comparisons difficult: Hutchison Whampoa and Hongkong Land paper is priced much tighter, reflecting their higher ratings, while issues from Tenaga, Bank of East Asia, KDB and Kepco offer yardsticks but are not directly comparable. "There are lots of reference points, but no real benchmarks," says Bryan Pascoe, head of debt syndicate at HSBC, joint lead on the deal alongside Merrill Lynch.

For a country whose institutions and corporates hit the market sparingly, Thursday June 29 was an extraordinary day for Malaysia. The sovereign launched a US$750 million 10-year global, while YTL Power completed the first convertible from Malaysia for four years. Malaysia's bond, led by JPMorgan and Salomon Smith Barney, was being priced as Asiamoney went to press, with sources quoting price guidance of 235 basis points (bps) over US Treasuries. The deal, for the Baa2/BBB rated sovereign, was notable for the fact that it did not use a roadshow. "Malaysia has actually been about the most active Asian sovereign issuer in the bond markets over the last year or so," says someone close to the deal. "Most investors are already quite familiar with the story." Foregoing a roadshow also allowed the issue to move quickly and avoid any changes in the market, taking advantage of the 25 bps rate cut by the US Federal Reserve.

If this is a bear market, then nobody told the Koreans. The country has been a source of a wide range of interesting and sometimes daring issuance over the last month. The star attraction has been the latest round of Korea Telecom's privatization, a US$2.24 billion ADS issue representing 55.5 million shares led jointly by UBS Warburg, Morgan Stanley and LG Securities. The sale was watched closely by many looking for signs of a change in attitude on the part of the Korean government towards privatizations, particularly following the twice-delayed Posco sale last year.

At the end of May, the listed property trust group, Mirvac Group, completed the largest commercial mortgage-backed securitization (CMBS) in Australia to date, issuing A$500 million in senior notes. The deal also stands as the largest single issue of rated debt raised by an Australian LPT. Led by ANZ and Westpac, Mirvac offered A$150 million (US$77.3 million) in fixed rate notes and A$350 million in floating rate notes, secured by the cash flows of 25 investment grade real estate assets, out of a diversified portfolio of 29. The real estate, valued at A$1.25 billion by Standard & Poor's (S&P), comprised approximately 60% commercial office buildings with the balance being a mix of retail, industrial and other commercial real estate, says Dennis Broit, Mirvac's finance director.

When GN Bajpai, chairman of Life Insurance Corporation of India (LIC) announced a couple of months back that his company planned to acquire a bank, no one thought it necessary to keep a close tab on the move. Government-run companies are prone to make announcements that precede action by anything up to two or three years. That Bajpai will actually go ahead and strike what is India's biggest bank acquisition deal – with a government-run bank and probably within six weeks – therefore came as a surprise. It came as a particular jolt to five foreign insurance companies who had chosen Indian banks as partners to match LIC's huge distribution strengths in the marketplace. These insurers – Metlife of the US, Prudential Life and Standard Life of the UK, Dutch insurer ING Insurance and Cardif (an outfit of BNP Paribas Bank) of France – find themselves faced with not just LIC but Corporation Bank preparing to compete with them in bancassurance.

Arun Shourie, for many years one of India's most celebrated journalists, is minister for disinvestment. He has the job of turning India's flagging privatization programme into a success, with 27 businesses targeted for sale in the coming year. It's no easy task. Until this year only one sale had taken place – of bread company Modern Foods to Hindustan Lever, for US$70 million. The only transaction to go through this year – the sale of a majority stake in aluminium company Balco to Sterlite Industries – has been mired in controversy and union action. He spoke to Asiamoney.

What a difference a year makes. In June Telstra issued a comfortably subscribed Eu1.5 billion (US$1.2 billion) 10-year bond, upsized by half from its target size despite volatility in the rest of the telecoms sector. Not bad at all for an issuer that, just 12 months ago, was halving the size of a domestic deal and slashing the tenor of a euro transaction in the face of weak investor sentiment towards joint ventures with PCCW and the threat of rating downgrades. In fact, Telstra didn't so much approach the market as swagger to it this time around, enticing investors with the promise of a step-up coupon. Telstra had done this before in its last euro deal, offering investors a 50 basis point (bp) increase if the credit dropped to Baa1/BBB+, and step-up coupons have become commonplace in bond offerings from major telcos. But this time Telstra offered a two-step coupon promising investors an additional 25 bps even if its rating drops to A3/A-. Telstra is rated Aa3/A+ and its ratings are on stable outlook; it has no intention of being downgraded.