LOCAL HEROES
The region’s banks get some love.
By Tom Leander

Asia’s financial institutions are fast seizing corporate banking businesses once dominated by their global competitors.

A Greenwich Associates survey of financial executives in Asia, excluding Japan, reveals that local banks are gaining in structured finance and other specialized services. Half of the banks they use for acquisition financing are now local, up 20 percentage points from two years ago. Local banks used for property financing and tax-based products also now make up half of the total, up 10 percentage points. Companies are also tapping more local banks as book runners in syndicated lending deals.

The survey, conducted between September and November 2006, polled executives in 606 companies, 47% of whom were from companies with sales in excess of US$1 bn.

The strong showing of Asian banks in structured finance is an affirmation of their efforts at specialization. “There is no longer any predetermined short list in Asia dominated by global institutions,” says Marcus Ohlig, a Greenwich research associate based in London. “Most companies use these products episodically; as a result, each time they have a need, they ask: ‘Who are the best banks?’”

In overall banking services, locals banks slightly increased their share to 42%, up two percentage points from 2004. This trend was most pronounced in India, where domestic banks now account for 45% of banking relationships, up 10 percentage points.

Still, Asia’s home-grown banks have a long way to go before toppling the multinationals across the board. Foreign banks still have a firm grip on cross-border financial services, accounting for about 40% of lead domestic relationships.