JP Morgan Chase snatches Asia Risk’s house of the year award

Although JP Morgan Chase has suffered sizeable losses to its lending book this year, and was downgraded a notch by all the major rating agencies in September, the bank picked up the awards as it had structured a number of innovative firsts in Asia designed to answer complex customer risk management requirements.

For example, the US investment bank has combined credit and forex derivatives to reduce the cost of funding for Korea Electric Power Corporation (Kepco), blended equity and interest rate derivatives to hedge a convertible bond issue, and structured a range of hybrid products to boost returns for Asian investors. In credit products, JP Morgan Chase has developed a number of investment products such as credit-linked coupon knock-out notes and credit-enhanced principal protected notes.

Although HSBC missed out on the house of the year award, after winning it last year, it picked up the forex derivatives house of the year award, which Citigroup picked up in 2001. HSBC is starting to reap the benefits of its electronic trading strategy, which allows clients to trade and execute plain vanilla currency derivatives through to currency options to swaps. HSBC has also aggressively expanded its local currency derivatives efforts in the region.

Deutsche Bank won interest rate derivatives house of the year, largely based on its efforts to lead the charge in structured interest rate derivatives products. The bank has been particularly active in the structured note market in South Korea, where it has transacted more than $1 billion in structured deals so far this year. In Taiwan, it has issued around $700 million in inverse floating-rate notes, capped and floored floating-rate notes, range accruals and digital coupon notes. Deutsche has also been one of the leading players in hybrid-structured products, incorporating interest rate and credit derivatives technology.

Deutsche also won the derivatives house of the year award for Japan. With one of the largest prime rate swaps books in Japan, the bank has helped clients to better manage their interest rate risks, by swapping prime rate-based loans into Libor-referenced securities. In the only other local award, Westpac was awarded Australia derivatives house of the year for maintaining its position as one of the most active domestic players in the Australian credit derivatives market. It has also boosted its equity derivatives distribution platform through a handful of high-profile purchases, and entered the Australian energy market through the acquisition of Enron’s Australian trading team.

Finally, Credit Suisse First Boston (CSFB) won the equity derivatives house of the year category. CSFB is one of the few banks active across the entire spectrum of equity derivatives business in Asia, with coverage ranging from corporate transactions to equity-linked investor products. Active in the retail market through its warrants and equity-linked investments business in Hong Kong, CSFB is also a significant player in the distribution of capital guaranteed products, both to third-party asset management firms and to its own private banking clients in the region. The bank is also one of only a few foreign participants to apply for a securities licence in the newly deregulated equity derivatives market in South Korea.

An Asia Risk editorial panel decided the award winners, and the judging process spanned two months during August and September. Banks were asked to submit information on their business in all the award categories and were then interviewed.

Full write-ups of the awards are available to Risk magazine and Asia Risk subscribers at www.asiarisk.com.hk/asiariskawards2002.