Group Wholesale Banking

We drive and sustain a culture that focuses on client needs. Our Client Segment Coverage Teams of Commercial Banking, Corporate Banking and Financial Institutions are further aligned along country, industry and segment lines that combine to help our clients meet their strategic objectives. As business priorities and operational complexity change at each stage of our clients’ growth, Client Teams were set up to provide customised banking and financial risk management services to meet the specific priorities of these clients.

Our Client Teams integrate relationship managers with product specialists in Transaction Banking, Investment Banking and Global Markets to provide a full suite of solutions including working capital and term lending, cash management, trade finance, financial supply chain management, global markets and risk management solutions as well as capital-raising and advisory capabilities. Teams are measured on how well they meet the long-term needs of our clients and extend the full capabilities of our franchise to support these relationships.

Our deep client relationships are based on the premise that we care for our clients’ businesses as if they were our own. We channel the same commitment that transformed us into a leading bank in Asia into helping our clients fulfil their Asian ambitions. They can depend on the strength and stability of one of Asia’s leading wholesale banks. Our ‘AA’-rating, strong balance sheet, prudence and robust risk management practices are assurance that we are here for our clients for the long term.

Despite the challenging macroeconomic environment in 2015, Wholesale Banking revenue grew by 12.7 per cent year on year, led by double-digit growth from Commercial Banking, Financial Institutions and Transaction Banking activities. Operating contributions to the Group grew by 13.3 per cent in 2015 as we prudently managed investments in line with new revenue opportunities. While net profit before tax was impacted by increased allowances made as we entered more challenging credit cycles, the year-on-year growth rate was a robust 7.8 per cent.

Revenue growth resulted from our greater focus on deepening existing client relationships even as we continued to gain market share with new clients who appreciate UOB’s unique combination of Asian expertise, on-the-ground coverage, strong balance sheet and credit ratings.

Wholesale Banking also increased the diversity of earnings through a wider range of products for our clients. These have helped enhance our support of companies seeking opportunities outside of their home markets in Southeast Asia and Greater China, as well as global institutions and MNCs operating in the Asia region. Strong revenue increases in cash management and Global Markets reflect our broader capabilities as well as our clients’ confidence in having UOB as a primary partner for growth.

Macroeconomic conditions will remain challenging in 2016, driven by a combination of several factors – continued volatility in commodities pricing that impacted companies in oil and gas, shipping and other related industries; uncertainties caused by lower rates of growth in China and Western markets; and continued political risk in the Middle East. While the resulting impact on trade and investment flows will affect companies in Asia in 2016, we remain confident of the long-term fundamentals and opportunities in the region.

Asia is projected to account for a quarter of global consumption and more than 60 per cent of the world’s trade by 2020. The expanding consumer base in ASEAN countries and Greater China will present clients with opportunities for growth that outpace other parts of the world. In addition, free trade and open market initiatives such as the ASEAN Economic Community, One Belt, One Road (OBOR), Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership will continue to influence and to drive our clients’ investments in the region.

To support the long-term growth aspirations of our clients and our shareholders, we will continue to invest in enhancing our product offerings and network coverage capabilities to deliver innovative solutions across the region. Key areas where we will continue to make investments include cash management, financial supply chain management and in our partnership with Global Markets product teams. In addition, we will build on the strengths of our Commercial Banking, Corporate Banking and Financial Institutions teams as we enhance our onshore coverage of key markets such as Indonesia and Greater China.

With demand for Renminbi (RMB) financial solutions intensifying in tandem with China’s rising economic influence as the world’s largest trading nation, we will continue to strengthen our RMB capabilities to support our clients. Our RMB Solutions teams are closely attuned to the business impact and opportunities arising from the internationalisation of the RMB and apply this knowledge to meeting our clients’ RMB needs in cash management, trade finance, foreign exchange, investment and hedging.

Commercial Banking: Connecting our clients with opportunities across Asia

Our Commercial Banking teams work closely with our clients to identify and to provide innovative solutions and services that enable them to grow their businesses. We increased our investments in-country and complemented these with initiatives focused on three key trade and investment corridors in Asia – between ASEAN and Greater China, within ASEAN, and within Greater China. We deepened our coverage of the Pearl River Delta and the Yangtze River Economic Belt, set up new branches in Hong Kong and China and expanded our cash management and trade finance product capabilities across ASEAN and Greater China. Our efforts position us strongly to support our clients as China’s OBOR and the TPP initiatives lead to the emergence of large-scale infrastructure projects and increasing trade and investment flows along these trade corridors.

This year, we also expanded UOB’s Foreign Direct Investment (FDI) Advisory Unit which provides comprehensive advisory services to clients as they expand into new markets. Our FDI Advisory teams have built a network of partnerships with government agencies, business forums, and policy and legal experts to support our clients as they consider strategic expansion in Asia. Over the past four years we have provided this unique service to more than 700 clients as they establish operations in new markets. Through our extended network of partnerships and our own local teams in market, we offer our clients unparalleled expertise that supports them at critical junctures of their business expansion.

To facilitate further intra-regional trade and investment opportunities for our clients in Asia, UOB signed four new Memorandum of Understanding (MOU) agreements with government agencies and private sector organisations in 2015. The first, with Indonesia’s Investment Coordinating Board, will enable UOB’s clients to apply for their Indonesia Principle Licence directly in Singapore without having to travel to Indonesia. With Vietnam’s Foreign Investment Agency, UOB clients will receive help expanding into key investment destinations in Vietnam such as Ho Chi Minh City, Hanoi, Da Nang and Hai Phong. We also signed an MOU with the China Council for the Promotion of International Trade Suzhou to help Jiangsu-based companies seize business opportunities in Southeast Asia. Our MOU with Thailand’s largest listed conglomerate in the industrial estate sector, Amata, will give clients of both parties access to business referrals through each other’s network.

In enhancing our support of our clients, Commercial Banking strengthened its teams covering China, Hong Kong, Taiwan and Indonesia. We also sharpened our focus on opportunities arising from investment flows and market developments for our clients. For instance in Myanmar, which is fast developing, we opened a new branch in Yangon offering cash management, corporate loans, trade and project financing to clients with interests in the country. UOB is one of a handful of foreign banks to have been given a Foreign Bank Licence in Myanmar.

UOB also entered into an agreement with Temasek Holdings to encourage the development of new entrepreneurs and startups in Asia by helping them accelerate their commercial viability and increase the value of their businesses. The UOB-Temasek joint venture, InnoVen Capital, will support startups in China, India and Southeast Asia to obtain venture debt financing without having to pledge additional collateral or to dilute their stakes in the company. InnoVen Capital will provide up to US$500 million in venture debt loans over the next five years to high growth, innovative startup companies operating in sectors such as technology, consumer, healthcare and clean technology.

Our strong client focus and coverage led to double-digit year-over-year revenue growth for the Commercial Banking business in 2015, driven by increased activity with existing clients as well as new client acquisitions across the markets in which we operate.

Corporate Banking: Supporting the ambitions of our corporate clients

Large Asian corporations as well as US and European MNCs that operate in the region are served by our Corporate Banking client teams. Our deep understanding of their business concerns, combined with our investments in regionally-integrated product platforms in cash management, trade finance, financial supply chain management and Global Markets enable us to provide them with sophisticated solutions that address their cross-border and multiple-market needs.

The ability of UOB to provide multiple product solutions across the region has been a key differentiator in our success with large corporate clients. For example, we successfully helped CTCI Corporation, Taiwan’s largest engineering, procurement and construction (EPC) company and a Top 150 Global Design Firm, meet the requirements of their cross-border business through our ASEAN platform in Singapore, Malaysia and Thailand. In 2015, we provided a bundled package of performance bonds, trade finance and cash management solutions to support CTCI’s EPC contracts in Malaysia. We also provided hedging solutions to mitigate CTCI’s exposure to currency volatility.

The combination of our local market knowledge and regional expertise enables UOB to deliver innovative solutions that drive bottom-line benefits for clients. In 2015, we delivered cash management solutions that increased operating efficiencies for our clients and maximised returns for corporate treasurers. One of the clients that benefitted from this was YCH Group for whom we structured a cross-border cash sweep in the Shanghai Free Trade Zone between its subsidiaries and the company’s headquarters in Singapore. This solution helped to make our clients’ cash management more effective, thereby reducing their overall funding costs.

To help our clients manage risk in the increasingly challenging macroeconomic environment across Asia, our client teams worked with Global Markets to provide solutions such as commodity hedging for mining, agribusiness and oil and gas companies as well as interest rate and foreign currency hedging for the wider portfolio of clients. UOB offers customised hedging solutions beyond vanilla currency and rates products, as exemplified in the coal hedging solution that we provided to a subsidiary of Banpu PCL, a leading regional mining and power company with operations spanning Asia Pacific. The commodity hedging solutions that we designed for them were part of Banpu’s risk mitigation strategies to counter volatility in the commodities market.

We also developed debt and equity capital raising solutions tailored to the long-term ambitions of our clients and helped them ease through the regulatory and operational complexities of managing their cross-border business.

In 2015, our Client Teams also leveraged the Bank’s extensive geographic footprint and Transaction Banking product capabilities to develop comprehensive supply chain solutions for our large corporate clients. These solutions drive efficiencies while providing our clients’ suppliers with competitive financing options. We also worked in partnership with the FDI Advisory Unit to ensure large corporate clients and MNCs derive maximum returns from their new investments in Asia.

Corporate Banking’s comprehensive approach to client solutions led to year-on-year revenue growth of nine per cent for the business in 2015, despite the impact to our structured trade commodities revenue stream caused by volatility in commodity prices and the slowdown in trade with China.

Financial Institutions Group: Partnering to help Asian economies grow

Our financial institution clients are essential intermediaries in the developing financial markets of Asia and are key contributors to economic growth. Through our involvement and partnerships with these clients, UOB helps contribute to the development and progress of the region’s financial sector.

These clients are supported by the Financial Institutions Group which provides for their funding, trade financing, cash management, hedging and capital market needs. Just as we do with our corporate clients, we harness the strengths of our franchise and on-the-ground presence to help our financial institution clients grow their businesses across Asia.

In 2015, targeted investments were made to expand our coverage of this client segment with specialist teams being formed to serve banks, insurance companies, sovereign wealth funds, central banks, asset managers, global property funds and other diversified financial entities. We also added to our suite of product solutions in the areas of trade finance, rates and currency derivatives, investment solutions and specialised finance structures.

One example of our collaboration with financial institutions is our work with Indonesia Eximbank (IEB), a state-run Indonesian bank. UOB was one of the mandated lead arrangers, underwriters and bookrunners (MLABs) on a US$1 billion syndicated loan used to provide financing to support Indonesia’s cross-border trade. We also provided IEB with advisory on treasury and alternative fundraising solutions in the capital markets.

Our Financial Institutions teams leverage our extensive network across Asia to connect clients to opportunities as we work with global institutional investors to source for good assets. One such client is Phoenix Property Investors, a private equity real estate firm that focuses on investment opportunities in Asia. In addition to helping the client manage market and liquidity risks, UOB provided financial solutions and advisory services for their acquisition financing and capital market fundraising.

Our support of financial institutions has driven strong revenue growth of more than 30 per cent in 2015 as we expanded our client portfolio and deepened our partnerships with leading firms across the region.

Group Transaction Banking: Creating client value through working capital, cash flow and liquidity solutions

Wholesale Banking continued to invest in cash management, trade finance and financial supply chain management to ensure that we provide our clients with the most innovative and seamless solutions to meet their domestic and increasingly complex regional operating requirements.

Overall, our Transaction Banking business performed strongly in 2015, growing by more than 15 per cent and contributing to more than a third of total revenue of Wholesale Banking, on the back of increased client demand for our services from companies investing in Asia.

To provide market-leading support to our clients in all segments in 2015, our Transaction Banking teams enhanced UOB’s cash management solutions, strengthened our financial supply chain management capabilities and continued to roll out the UOB BIBPlus electronic banking platform. We also introduced virtual accounts to help our clients manage their account receivables efficiently.

Through the enhancements in cash management, we help our clients improve their operating efficiencies in managing payments and collections, optimise their cash flows, and effectively maximise their returns.

As a result of our continued client-focused approach, our cash management business recorded strong year-on-year revenue growth of more than 40 per cent in 2015.

We also created value for our clients by developing greater consistency and transparency in the pricing of our term deposits portfolio. These improvements were made by managing the alignment of the Bank’s long-term deposit strategies with our clients’ cash management requirements. These actions also improved the quality and diversification of the Bank’s deposit profile.

We are also complementing and enhancing our proprietary development of financial supply chain management solutions. We collaborate selectively with strategic FinTech companies to provide comprehensive solutions for the diverse and rapidly changing requirements of large corporations and MNCs with suppliers based in Asia. For example, we successfully implemented regional solutions for a large MNC client with suppliers from Singapore, Malaysia, Thailand and China.

Committed to advise and to act in the best interests of our clients, we have also invested in training for our sales teams and relationship managers to deepen their knowledge of financial supply chain management issues and solutions.

Macroeconomic issues including commodities’ price volatility, lower growth rates in China and margin compression challenged our trade finance performance in 2015. Despite these headwinds, our volumes remain strong and are showing signs of recovery and growth.

Our efforts were recognised by the industry with Wholesale Banking receiving 33 awards from across the region. These include a record 28 awards for Best Overall Cash Management Services in both domestic and cross-border categories across China, Malaysia, Singapore and Thailand at the 2015 Asiamoney Cash Management Poll. We also received four awards at The Asset Triple A Treasury, Trade and Risk Management Awards 2015, namely Best SME Trade Finance Solution in Indonesia, Best Trade Finance Solution in Thailand, and Best in Treasury and Working Capital for SMEs, as well as the Editors’ Triple Star BizSuper in Thailand. We also won The Corporate Treasurer’s Best Trade Finance Strategy award in the Asia’s Best Treasury and Finance Strategies category.

Group Investment Banking: Providing value-added financing and advisory solutions to our clients

We continued our investments to deepen our capabilities, particularly in corporate finance advisory solutions. Together with established capabilities in debt and equity capital markets, we were able to deliver an improved platform to our clients as they expanded and grew their businesses organically or via event-driven opportunities.

In 2015, the Debt Capital Markets team was ranked among the top arrangers across Asia (ex-Australasia and Japan). UOB was one of the MLABs for Indonesia Eximbank’s US$1 billion Dual Tranche Credit Facility, which subsequently was awarded the Best Syndicated Loan in 2015 at The Asset Triple A Country Awards 2015 and Syndicated Financial Institution Deal of the Year at Asia Pacific Loan Market Association’s (APLMA) 5^th Asian Pacific Syndicated Loan Market Awards 2015.

Other award-winning transactions arranged by the team include the HK$40 billion term loan facilities for Cheung Kong Property, which was one of the largest financing deals of its kind in Hong Kong. It won Syndicated Deal of the Year at the APLMA 5^th Asia Pacific Syndicated Loan Market Awards 2015. Our US$1,500 million term loan facility for Reliance Industries Limited was also awarded Syndicated Corporate Deal of the Year by APLMA and Best Syndicated Loan at The Asset Triple A Regional Deal Awards 2015.

UOB successfully lead-managed over 70 local bond transactions across the region in 2015. In the local currency fixed income sphere, we reinforced our position as a leading regional player. We were one of the top four bookrunners in the Singapore dollar bond market, a reputable lead manager in the Malaysian ringgit bond market and one of the top underwriters for corporate bond issuances in the Thai baht bond market.

In the Singapore bond market, UOB’s support for our clients was demonstrated via several notable deals that were executed. We acted as the sole lead manager and provided the credit wrap for PT Logindo Samudramakmur Tbk’s S$50 million five-year credit enhanced notes. We were the sole arranger of Roxy-Pacific Holdings Ltd’s debt issuance programme and raised S$60 million for the company via a maiden issuance of three-year notes, against a backdrop of volatile market conditions. Amid keen competition, we secured the role of a joint-arranger and lead manager for Singapore Technologies Telemedia Pte Ltd’s establishment of a S$2 billion multi-currency medium term note programme followed by a debut issuance of S$300 million 10-year notes. UOB was also involved in benchmark Basel III-compliant subordinated Tier 2 capital issuances for several foreign financial institutions, including ANZ’s S$500 million 12 non-call seven-year (“12NC7”), BPCE SA’s S$150 million 10.5NC5.5 and BNP Paribas’ S$250 million 10NC5.

In the Thai baht corporate bond market, UOB (Thai) successfully lead-managed 48 issuances for clients including several leading Thai bond issuers in various industries.

Our team in Malaysia successfully arranged and placed-out for UOB (Malaysia) Bhd’s Basel III-compliant Tier 2 subordinated bonds of RM1.0 billion which were 2.2 times over-subscribed by a broad range of investors.

In addition, our Equity Capital Markets team in Singapore emerged as one of the top two issue managers by initial public offering deal count in 2015. Despite the challenging equity market conditions, we acted as issue manager, underwriter and placement agent for the two largest Catalist listings of the year, for Jumbo Group Limited and Soo Kee Group Ltd, both of which are prominent local businesses and established UOB clients.