Singapore’s UOB defies investment banking slump

SINGAPORE: United Overseas Bank Ltd (UOB) said a boost from debt underwriting in local currencies across South-East Asia is helping it ride out a wider slump in bond issuance that’s weighing on global firms.

Fixed income deals in the region are up about 40% from a year ago, said Edmund Leong, managing director and head of group investment banking at UOB, in an interview.

Singapore’s second-biggest bank is seeing double-digit increases in all segments of its investment bank, from mergers and acquisitions to debt, except for equities that notched a single-digit rise, he said.

“We have had a better year than 2021,” said Leong, declining to be more specific, ahead of UOB’s results today. UOB is on pace to rank fifth this year in Asia ex-Japan and China local currency bonds, up from 18th in 2020, according to data compiled by Bloomberg. Leong joined the bank in 2015 after stints at Macquarie Group Ltd and Bank of America Corp.

Rate hikes by the Federal Reserve along with fears of a looming recession have proved particularly painful for investment bankers across Wall Street, with their clients putting off stock and debt sales while waiting for a warmer reception from investors.

For UOB, Leong said local currency bond issuance has been a bright spot, particularly in Thailand, Malaysia and Singapore. Leong cited, as an example, the bank’s work in helping Mercedes-Benz Group AG issue ringgit bonds in Malaysia since the company’s inaugural issuance.

The US dollar fixed-income market, in contrast, has seen volumes crater this year, he said.

“People prefer to issue in local currencies as it is more stable at this point in time and also because the US dollar bond market is very choppy,” he said, adding that the development of the local currencies market in South-East Asia has helped.

UOB’s purchase of Citigroup Inc’s South-East Asia consumer banking businesses, expected to complete by early 2024, will provide another platform for the investment bank, he said, with fixed income and equity distribution benefiting.

He will have about 100 bankers in his team by the end of the year, the majority based in Singapore, from 75 people about five years ago. The growth in the business means he now has two bankers each in Indonesia and Thailand, and has built a small team helping with loan syndication in China. Leong also said he is considering expanding onshore in Vietnam. — Bloomberg