Asiamoney New Silk Road Finance Awards
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The Middle East and Africa boast some of the largest investment flows from China globally, and so far Chinese state-owned banks have dominated the funding needs of Belt and Road projects in the region.
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This wasn’t the biggest Belt and Road transaction on the table this year in southeast Asia – far from it. China does a lot of business in the Asean region, much of it in the shape of big-ticket oil and gas, mining, transport and telecoms deals.
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Many of the big cross-border financing deals HSBC does for its big corporate customers in southeast Asia should come with the letters ‘BRI’ pre-stamped on them. The bank is a powerhouse in the region, but more importantly, its sophisticated financial expertise so often seems to match and overlap, with eerie precision, exactly what China is trying to do with BRI.
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So often, Maybank is a bank of firsts, at least where the Belt and Road Initiative is concerned.
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Siam Commercial Bank emerges as a worthy winner of this award. The Bangkok-based lender is an important regional financial partner for China and for mainland firms, small and large.
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It is the depth and the weight of Standard Chartered’s BRI-related deal list over the last year that tips the scales in favour of the emerging market-focused lender.
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CICC has become a go-to bank for Chinese and other corporations looking to raise money via the capital markets along the Belt and Road. Beyond greater China, its stronghold is southeast Asia, where in recent years it has quietly become a deal machine.
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Year after year, Bangkok Bank quietly goes about getting business done. In the context of this award, it is a force for innovation and for good, its five full-service branches in China (in Shanghai, Beijing, Shenzhen, Chongqing and Xiamen) helping it to play a big role for Beijing’s biggest corporations and lenders in and across southeast Asia.
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At $72 million, the winning project is definitely not the largest Belt and Road Initiative-related transaction in the region over the last year. But its complexity and its value, which really emerges only with the benefit of hindsight, truly resonate.
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Under its president and chief executive Muhammad Aurangzeb, Habib Bank has been transformed. It is among the most important non-Chinese banks – with Citi, Standard Chartered and HSBC – involved in the construction of the long and winding Belt and Road.
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Under its president and chief executive Muhammad Aurangzeb, Habib Bank has been transformed. It is among the most important non-Chinese banks – with Citi, Standard Chartered and HSBC – involved in the construction of the long and winding Belt and Road.
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Under its president and chief executive Muhammad Aurangzeb, Habib Bank has been transformed. It is among the most important non-Chinese banks – with Citi, Standard Chartered and HSBC – involved in the construction of the long and winding Belt and Road.
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In many ways this was a breakout year for Citi and its relationships with the Belt and Road Initiative. Under the watch of Beibei Li, head of banking and origination for Belt and Road, the US lender figured out how to use its vast international network to serve clients in China that are keen to up their investments across the region.
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One of the less-mentioned shifts in the Belt and Road Initiative over the last few years has been in the ability of mainland lenders and corporates to adapt to a complex and ever-changing world.
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Standard Chartered is big in the Middle East, specializing in exactly the kind of heavy lifting – chunky loans, local bank accounts, foreign exchange, supply chain solutions – that Chinese firms most keenly need when they set out to fund projects along the Belt and Road, but which are very often in short supply.
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HSBC’s capital markets team is at the top of its game in the Middle East. It is the go-to lender of choice for any Chinese firm looking not simply to raise capital along the Belt and Road, but also to access the kind of sophisticated financial solutions that can only be provided by a handful of global lenders.
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What an interesting financial institution Banque Misr is. Under the leadership of its chairman, Mohamed El-Etreby, the Egyptian lender has long been a clear regional leader in corporate and social responsibility. But in recent years it has spotted the benefits of being a localized power player on the Belt and Road scene, and has taken steps to put itself at the heart of the project.
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HSBC is head and shoulders above its peers in this award – as it should be. The UK-headquartered institution is the leading foreign lender in China and a powerhouse in the Middle East: in Euromoney’s Awards for Excellence 2020, it was awarded best investment bank for the region, as well as best bank for sustainable finance and for transaction services.
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Not for nothing is Bank of China still widely viewed as the country’s most outward-facing bank. It’s the country’s oldest extant lender and was the first mainland financial institution to boast a branch in the Middle East – a rep office in Bahrain that opened its doors to business back in 2004.
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First Abu Dhabi Bank’s key strength in the context of this award is not just its robust credit rating, standing at AA- from Fitch and S&P, and Aa3 from Moody’s – although that matters. Nor is it the bank’s implicit government backing – although that matters too.
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VTB, which is led by president and chairman Andrey Kostin, is the only Russian bank with a full financial licence to conduct banking operations in mainland China. It is also planning to open a new office in Shanghai’s financial district this June as business expands.
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As China’s leading investment bank, CICC has long proved its worth when it comes to executing deals for mainland clients and helping them tap the global investor base.
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Credit Bank of Moscow has made progress in the last year when it comes to boosting its focus on China and the Belt and Road Initiative.
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Citi’s reach in Central and Eastern Europe, and Central and West Asia is impressive.
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Located at the heart of Central Asia, Uzbekistan is a key pillar along the Silk Road. Chinese officials appear to have realized its strategic importance more than 2,000 years ago, when trade relations between the two countries were first established.
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VTB, which is led by president and chairman Andrey Kostin, is the only Russian bank with a full financial licence to conduct banking operations in mainland China. It is also planning to open a new office in Shanghai’s financial district this June as business expands.
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China International Capital Corp is known for its rigorous research on the Belt and Road Initiative. This year, the firm’s research department, led by chief economist Peng Wensheng, doubled down on its bottom-up research approach, even in the shadow of the pandemic.
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Citi has set itself apart from its international peers thanks to its growing dedication to the Belt and Road Initiative this year, building an enviable portfolio of landmark BRI projects.
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The seed of this eye-catching project was planted when Chinese president Xi Jinping visited Peru in November 2016. During Xi’s visit, China Three Gorges Corp (CTG) signed an agreement with the Peruvian ministry of energy, agreeing to collaborate in the renewable energy industry. After that, the Chinese company began a series of investments in Peru, paving the way for this landmark acquisition.
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Despite being nicknamed ‘bank of the universe’ by Chinese bankers because of its sheer size and wide client reach onshore, ICBC has a surprising reputation for being low key. Its belt-and-road effort is no exception. The bank has made little attempt to market itself as a BRI bank but by the end of June this year, ICBC had supported more than 400 BRI projects and provided more than $100 billion of loans.
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What does the coronavirus mean for the Belt and Road Initiative? The BRI scheme is defined by the global transfer of financial and physical capital, labour and increasingly deeper relationships between people from vastly different places. How can it survive at a time when global travel has been brought to a virtual standstill?
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One of the less-mentioned shifts in the Belt and Road Initiative over the last few years has been in the ability of mainland lenders and corporates to adapt to a complex and ever-changing world.
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With a track record of more than 160 years of operations in China and 150 years in the Middle East and Africa, Standard Chartered is ideally placed to foster connections between the regions in the Belt and Road Initiative.
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Supporting the Belt and Road Initiative globally is a strategic priority for HSBC – and the bank’s deep roots in Asia make it a natural partner for governments and firms looking to enhance their integration with the project.
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Banque Misr wins the award for best local bank in the Middle East and Africa for BRI for the second year in a row by virtue of its impressive commitment to promoting trade and financing flows between China and the region.
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Citi is ideally placed to support Belt and Road trade and initiatives across the region given its presence in 24 countries in the Middle East and Africa and its strong track record in Asia.
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Agricultural Bank of China is playing an increasingly important role in promoting Belt and Road objectives in the United Arab Emirates. China’s third-largest bank opened its second Middle Eastern branch in Dubai in May 2017. The new operation acts as a renminbi clearing centre for the UAE, as well as to offer financial services, including trade finance and syndicated loans, to local companies.
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First Abu Dhabi Bank consolidated its position as the leading Middle Eastern bank for Belt and Road financing during the awards period from 2018 to 2019.
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Created in 2012 by the Belarusian government with the support of policymakers in Beijing, Great Stone Industrial Park is the largest international industrial park with Chinese investment and a cornerstone of Belarus’s commitment to the Belt and Road project.
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The expansion of Minsk National Airport is a crucial part of local policymakers’ drive to position Belarus at the heart of the Belt and Road Initiative. Belarusian president Alexander Lukashenko officially opened the second runway at Minsk National Airport in May. The new facility, which took three years to complete and was built using state-of-the-art technology, is big enough to accommodate the largest commercial aircraft and doubles the airport’s capacity for passenger traffic.
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Belarus has been an important partner for China in central and eastern Europe for nearly two decades, and the level of cooperation has intensified since the announcement of the Belt and Road Initiative in 2013. This in turn has created an increasing need for financial services to support rapidly expanding trade, economic and tourism links between the two countries.
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With the inauguration last year of Astana International Financial Centre (AIFC), Kazakhstan is rapidly emerging as a hub for Belt and Road financing, as well as for transportation. China International Capital Corporation (CICC) has positioned itself at the heart of this initiative and as a key conduit for Chinese investment and financing into Kazakhstan. In 2017, the bank signed a strategic cooperation agreement with AIFC to provide advice on the development of local capital markets and technical support for Astana’s new stock exchange.
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ICBC became the first Chinese bank to open a subsidiary in Vienna in May this year, to promote cooperation between China and Austria and serving as a gateway to central and eastern Europe (CEE).
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China International Capital Corp’s research on the Belt and Road Initiative is comprehensive, rigorous and most importantly, honest.
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No other international bank commits to the Belt and Road Initiative as HSBC does.
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Kazakhstan is at the heart of the Belt and Road Initiative, both geographically and strategically. The project was first announced by China’s president, Xi Jinping, in the country’s capital Nur-Sultan in 2013; two of the six trade corridors pass through the country.
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Citi’s presence in 105 of the Belt and Road countries – particularly in Europe and Latin America – puts it in a perfect position to connect Chinese clients.
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For Chinese banks, the Belt and Road Initiative has long gone beyond simply providing funding for overseas infrastructure projects. In the process of redefining the project, Bank of China is contributing its own understanding of BRI as a Chinese bank.
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When awards like these are being handed out, HSBC should, just by dint of its long history and presence in China and southeast Asia, be a perennial contender. Yet any lender, whatever its size and history, still has to do the legwork, a fact that the UK-based bank knows full well.
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Maybank has been consistently successful at inserting itself into local and regional BRI deals.
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Siam Commercial Bank has built strong and sturdy links with Chinese lenders and corporates, working hard to ensure it is a key conduit in bilateral trade in general, and in local BRI deals.
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No one in southeast Asia can hold a candle to Standard Chartered, the only international bank present in all 10 Asean markets, and with a history in the region that stretches back 150 years.
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This award, while hotly contested, only really had possible one winner. Under its chairman, Gao Ming, Hong Kong-based ICBC (Asia) – which is a subsidiary of Industrial and Commercial Bank of China – has become a regional powerhouse in syndicated lending in a remarkably short space of time.
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DBS’s importance to the Belt and Road Initiative becomes more apparent every year. Over the last 12 months, the Singapore-based lender provided financial advice and services to five projects backed by mainland corporates in three BRI countries.
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Chances are, when you stumble upon a sizeable China-backed deal to invest in infrastructure in Pakistan, Habib Bank Ltd is involved. The Karachi-based financial institution, Pakistan’s largest lender by assets, wins plaudits and prizes this year, courtesy of a $520 million lignite coal-based power project in Sindh province. The deal was signed in December 2018 and the project will be built by Thar Energy, a consortium run by chief executive Saleemullah Memon, and comprising Hub Power Company, which owns 60% of the plant, local chemicals firm Fauji Fertiliser and China Machinery & Engineering Corporation.
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Many international banks start pitches for awards by extolling their unrivalled understanding of local markets. HSBC is one of the few that lives up to the boast. Across south Asia, it had a leading role in a slew of BRI deals. In Sri Lanka, it acted as sole mandated lead arranger, lender and agent on a $72 million, Sinosure-supported facility to finance the upgrading of hospitals in Sri Lanka.
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In essence, the BRI is little more than a big and ambitious country’s outward-facing trade policy, which happens to hit more Asian economies than it misses. Each year it grows and matures. Perhaps the key BRI change over the last year has been India’s tentative embrace of the project. Standard Chartered’s pitch for this award is evidence of India’s wary but undeniable acceptance that the BRI is a long-term reality that it can no longer afford to ignore.
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Few lenders were quicker to spot the benefits of China’s Belt and Road Initiative than Habib Bank Ltd. Over the last decade, HBL has been Beijing’s go-to financial partner in Pakistan, and a vital player in its efforts to draw south Asia tightly into its economic and financial orbit.
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Standard Chartered spotted the benefits of China’s Belt and Road Initiative from the start. With 160 years of experience in China and 150 years of history in south Asia – where it is present in India, Bangladesh, Nepal, Pakistan and Sri Lanka, with 250 branches and 14,000 employees – StanChart saw from the outset that it and the BRI were a natural fit.
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Bank of China (BOC) has been at the forefront of BRI projects in south Asia, and a regional pioneer among mainland banks. Over the last three years, it has pitched for these awards several times, relying on its presence in a host of deals such as the 10-year, $700 million syndicated term loan raised for Pakistan’s finance ministry in December 2017. BOC was a key player in that deal, which secured partial guarantees from the World Bank.
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When Cosco Shipping International (Singapore) announced its intention to buy Cogent Holdings, the deal made not only great practical sense, but also served to underline the speed with which the Belt and Road Initiative has become an integral part of the financial and commercial world.