Indosuez builds on Asia network to expand

Indosuez builds on Asia network to expand

HONG KONG (Reuter): Banque Indosuez is building its business in Asian debt capital markets and corporate finance as part of its strategy to expand its merchant banking capabilities in the region, company officials said.

"We are adding 10 to 15 people throughout the region in debt capital markets, client relations and corporate finance, said Jean-Claude Gruffat, executive vice president and chairman, Asia Pacific.

The bank's strength is its distribution network, he said.

"Most of our competitors are issuer driven. Some of them can originate, but must rely on others to place the paper," he said. "We have a strong distribution base through our brokerage, now our origination capabilities must be built up."

Banque Indosuez has branches or subsidiaries in 22 Asian locations. Its core businesses are in corporate lending and in stock brokerage via its wholly owned subsidiary W.I. Carr.

In the capital markets, Gruffat said the company is putting it main efforts into distributing short-term paper to Asian investors with the aim of branching out into longer-dated debt securities once the region's markets mature.

"We started by arranging Thai commercial paper and issuing it in Thailand and now we are placing it elsewhere in Asia and Europe," said Gruffat.

The bank is replicating that effort in other countries, notably Indonesia, India and Malaysia.

Gruffat said the bank also wants to enter the syndicated loan market, where it does not currently have a presence.

"In the past, we did not have the capital base. Now, with the backing of Credit Agricole, we have a much better capability and we believe that the syndicated loan market offers significant opportunities, especially with mid-cap companies," he said.

Credit Agricole, one of the world's largest banks, recently acquired a 51 percent stake in Banque Indosuez from French holding company Compagnie de Suez.

Credit Agricole has the option to increase its stake to 80 percent from July 1, 1997. Suez may sell the remaining share to Credit Agricole in the year 2000.

Banque Indosuez can underwrite up to US$100 million per loan transaction without referring to the head office, Gruffat said.

Rating agencies Moody's Investors Service and Standard and Poor's Corp both said they may raise Banque Indosuez's long-term ratings following news that Credit Agricole would gain control.

Banque Indosuez is rated A3 by Moody's and A-minus by S&P. Banque Indosuez chairman Christian Maurin said he expects the ratings will be increased.

Maurin said there is little overlap between Credit Agricole's Asian business, which is concentrated in trade finance, and Banque Indosuez's plans for the region.

While Banque Indosuez sees especially good opportunities in Malaysia, Thailand, Indonesia and India, it also is looking at Greater China, the officials said.

The bank has branches in Shanghai, Guangzhou and Shenzhen and expects its Beijing representative office to be approved for branch status soon.