WORLD'S BEST BANKS, THE

Global Finance, Oct 2004 by Platt, Gordon, Hawser, Anita, Haddock, Fiona, Fittipaldi, Santiago, Gregson, Johnathan

WORLD'S BEST BANKS

A growing global economy made it somewhat easier to be a banker in the past 12 months, as credit risks generally declined and demand for banking services was brisk. The skills of the world s bankers are being tested at present, however, as a weaker underwriting environment is forcing greater reliance on advisory and other fees, including those from mergers and acquisitions. Ironically, it is the banking industry itself that is making the biggest contribution to M&A activity, as industry consolidation continues apace in many countries.

The winners this year are those banks that attended carefully to their customers' needs and accomplished enviable results while preparing for an uncertain future. Our selections begin with the half-dozen truly global banks that provide the best banking services in these specific sectors: corporate, retail, private, asset management, custody and investment banking. Global Finances editorial team also identified the best bank in 97 countries.

In selecting these top banks, we considered factors that range from the quantitative objective to the informed subjective. Objective criteria were growth in assets, profitability, geographic reach, strategic relationships, new business development and innovation in products. Subjective criteria included the opinions of equity and credit ratings analysts, banking consultants and others in the industry. The winners are leading banks that may not be the largest, the oldest or the most diversified in a given country or sector, but rather the best-the bank with which corporations around the world would most likely want to do business.

Within this listing of the World's Best Banks we have included our May 2004 list of the Best Emerging Market Banks. Contributors: Gordon Platt, Anita Hawser, Fiona Haddock, Santiago Fittipaldi and Johnathan Gregson.

BEST GLOBAL BANKS

BEST CORPORATE BANK

CITIGROUP

Citigroup has more corporate customers in more countries than any other bank. Its geographic reach and product range are unequaled, and it delivers consistent, high-quality service. Citigroup keeps a keen focus on customer needs and tailors its products accordingly. The bank's local expertise and global product platform enable it to excel in more emerging markets than its competitors. Citigroup's stated ambition is to be number one in every product category in which it does business. The bank is not afraid to make substantial commitments to technology and strategic acquisitions to strengthen its core franchises. Citigroup's biggest acquisition this year was its $2.7 billion purchase of KorAm Bank, the sixth-largest bank in South Korea. Citigroup's capital markets and banking income was $1.5 billion in the second quarter of 2004, a 28% increase over the same period a year earlier.

A lull in investment banking hurt underwriting volumes in equities and fixed-income markets, but revenue from advising on mergers and acquisitions was up 45%. Lending revenues increased 26%, due mainly to an improved performance in credit derivatives and the effect of the KorAni acquisition. Transaction services income was $261 million, a 45% increase over the second quarter of 2003. Citigroup continues to fire on all cylinders.

* Robert Druskin, CEO, global corporate and investment bank www.citigroupgcib.com

BEST CONSUMER BANK

HSBC

HSBC's purchase of a 19.9% stake in China's Bank of Communications in August 2004 will give it a strong foothold in a market of 1.3 billion people. As an early mover, HSBC has gained the largest foreign presence in China's financial services sector. It holds a 9.9% stake in Ping An Insurance and is hoping to set up a credit-card joint venture with Bank of Communications, which has 2,700 branches in 137 Chinese cities. London-based HSBC, Europe's most profitable company in the first half of 2004, is looking for acquisitions elsewhere in Asia. As Global Finance went to press, it was competing with Japan's Shinsei Bank for the Aplus consumer-finance business of UFJ Holdings. It was also in the running for a stake in Takefuji, Japan's most profitable consumer lender.

HSBC is exporting the expertise it gained from its $14.8 billion takeover in 2003 of US consumer finance company Household International. HSBC is operating under the Household brand name of Beneficial in the Polish market, for example, where it purchased Polski Kredyt Bank, now HSBC Bank Polska, in October 2003. Closer to home, HSBC is partnering with clothing retailer Marks & Spencer in an effort to become a larger credit card issuer in the UK. HSBC purchased Marks & Spencer's financial-services unit in July 2004.

* Stephen Green, CEO

www.hsbc.com

BEST PRIVATE BANK

UBS

UBS, the world's largest private bank, is expanding into countries outside of its home base of Switzerland with a string of European acquisitions. Earlier this year UBS purchased the UK private client investment manager Laing & Cruickshank Investment Management. It also acquired Scott Goodman Harris, which primarily serves executives and company directors, a key market for UBSs wealth-management business in the UK. These acquisitions followed the purchases in 2003 of Lloyds Bank in France and the German private-client business of Merrill Lynch. UBS is seeking more such acquisitions in Italy and Spain. The bank's clients have access to a wide range of products that are tailored to fit the specific tax and legal requirements in each country. UBS also launched a US-based private wealth-management group, targeting investors with more than $10 million in assets.