Western European Awards for Excellence 2012: By country

Austria

Best Bank: Bank Austria
Best Investment Bank: Deutsche Bank

Mounting losses related to bad loans and exposure to Greece have afflicted Austrian banks as much as those elsewhere, leading in some instances to the government nationalizing those banks deemed most vulnerable.

While the threat of further nationalizations still looms large, Austria’s main banks have redoubled their efforts in the past year to strengthen their capital positions and improve the underlying performance of their core businesses.

Most of the main banks in the country can claim to have achieved these objectives, but the one bank to have arguably had the best results is Bank Austria, a subsidiary of UniCredit.

In 2011, the bank’s operating performance was sound, with a net profit of €209 million for the year despite absorbing a series of exceptional charges, such as a €396 million write-down on Greek government bonds and impairment losses on goodwill related to its banking subsidiaries in Kazakhstan (€350 million) and Ukraine (€329 million).

The positive momentum continued in the first quarter of this year, when net profit was up 17.3% at €399 million on the same period the year before.

Similar to the first quarter, much of the underlying performance last year was driven by Bank Austria’s customer business in Austria and central and eastern Europe, where lending volume increased by an annual average of 2.6%, and net write-downs on loans and provisions for guarantees and commitments fell 23.9% on 2010.

As a result, net operating profit generated rose by €412 million (23.1%) in 2011 to €2.2 billion, with net operating profit in Austria alone up 12% on the year before.

Bank Austria’s financial position improved too, with the share of customer loans and receivables increasing to 67.7% of the bank’s €200 billion of total assets at the end of 2011, with risk-weighted assets falling as customer lending volume increased.

The bank’s core tier 1 capital ratio was a healthy 10.55% at the end of last year – up on 10.04% in 2010.

However, Bank Austria would be the first to admit that more work is required.

Indeed, rating agency Moody’s downgraded the main Austrian banks, including Bank Austria, in June, citing low levels of capital relative to their western European peers, and especially given the risks they face in central and eastern Europe.

The agency said it expected problem loans to remain high for at least this year, forcing banks to set aside more provisions against losses and eating into earnings.

Deutsche Bank’s investment banking franchise in Austria is traditionally strong, and this year has been no different. The bank topped Dealogic’s ECM league table by value of deals for the period and was ranked second in DCM.

Top among its equity deals last year was its bookrunner role on the €619 million IPO for Austrian cellulose fibres group Lenzing and its majority owner, a transaction that marked the largest ever from the country’s chemicals sector, and the first sizeable IPO from Austria since 2007.

Deutsche was also involved in the €750 million rights issue for OMV, the largest oil and gas energy company operating in emerging Europe, to bolster its balance sheet after acquisitions.

In DCM, Deutsche acted as a joint bookrunner on the largest bond issue from Austria over the awards period: a dual-tranche combined €5 billion issue for the Austrian Federal Financing Agency. The issue was split between a €3 billion 10-year tranche and a €2 billion 50-year tranche – the longest fixed-maturity euro-denominated government bond over the period, and the first 50-year in the sector since early 2010.

On the corporate side, the bank acted as joint bookrunner on Austrian Federal Railways’ €1 billion bond issue in October 2011 – the second-largest corporate bond sale in Austria over the period.

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Belgium

Best Bank: BNP Paribas Fortis
Best Investment Bank: Goldman Sachs

It has been a tough period to generate returns for shareholders for banks in Belgium and BNP Paribas Fortis had to take hefty mark-downs on holdings of Greek sovereign bonds as it sought to clear its decks last year. But the bank ended the 12 months under review with a strong tier 1 capital ratio of 16.5% and a favourable loan-to-deposit ratio of 101.4%. Meanwhile it proceeded with its integration plan in Belgium, which has realized higher costs savings than originally forecast while making Belgium a centrepiece of the enlarged group. Corporate and transaction banking Europe, global trade services, global cash management and factoring are now well-established and key components of the entire group set-up, based in Brussels.

As Belgian clients worried about access to bank funding, BNP Paribas Fortis stuck by them. It was by far the lead arranger of syndicated loans to Belgian borrowers in the 12-month award period, with a 17% market share from running the books on 20 loans worth $5.4 billion, way ahead of second-placed ING with a 10% market share from running the books on 15 deals worth $3.3 billion. KBC had 6% market share from 13 deals worth $1.8 billion.

And BNP Paribas Fortis did not just support the Belgian economy through large syndicated loans to corporations. In the retail and private banking business, lending to self-employed and professional clients and businesses, and to individual customers, enjoyed steady growth. Noteworthy in lending to individual clients was BNP Paribas Fortis’s provision of ‘green loans’ for house building and renovation.

Goldman Sachs takes the award as best investment bank in Belgium even though it does not top the rankings in any single category. Rather, its strength in depth across the full spectrum of M&A advisory, equity capital raising, high-yield and investment-grade debt is what makes the firm stand out.

Goldman advised on four out of the six top completed M&A transactions; it was adviser in the largest private equity transaction in Belgium; was involved in three out of the six high-yield deals; and participated in the second-largest investment-grade financing.

The country’s troubled financial sector, away from BNP Paribas Fortis, has drawn on Goldman’s industry sector expertise. The firm acted as financial adviser to KBC on the sale of its Polish subsidiaries, Warta and Kredyt Bank, to Talanx and Santander respectively, key steps in the implementation of KBC’s revised restructuring plan to reimburse the remaining €6.5 billion of state capital as agreed with the European Commission.

This done, Goldman also acted as joint bookrunner on a $1.3 billion bond deal for the bank in March of this year, the largest five-year senior unsecured paper KBC Bank has issued since March 2010 and the fourth out of the last five KBC benchmark bonds that Goldman Sachs has lead managed.

Goldman acted as sole financial adviser to Dexia on the sale of Dexia Banque Internationale à Luxembourg to Precision Capital and the Grand Duchy of Luxembourg. It also acted as financial adviser to Dexia on the sale of Dexia Bank Belgium to the Belgian government-owned Société Fédérale de Participation et d’Investissements, key steps in Dexia’s rescue plan.

Best Bank: BNP Paribas
Best M&A House: BNP Paribas
Best Debt House: BNP Paribas
Best Equity House: Société Générale CIB

The election of François Hollande as president of France could herald unprecedented change in French banking. As a candidate, Hollande emphasized his desire for radical reform of the banking sector and his support for a financial transaction tax. Although Hollande has stated that the universal bank model in France is not under threat, he wants to separate retail and speculative banking operations via Volcker-style regulation.

His attitude towards the banking sector could be starkly revealed soon as mortgage lender Caisse Centrale du Crédit Immobilier de France teeters on the edge.

The uncertain political environment in the country is not helping the French banks, which continue to grapple with the fallout from the eurozone debt crisis. Société Générale’s and Crédit Agricole’s Greek subsidiaries have left them vulnerable to the chaotic situation in that country, and bank valuations have been depressed across the board by continuing regulatory uncertainty.

Of the big French banks, BNP Paribas is widely seen as more insulated from the storm than its competitors, largely thanks to its geographical diversification. But it is very much a French bank. One-third of all revenues have a domestic origin and 30% of staff are employed in France.

Retail banking revenues topped €4 billion for the first time in the first quarter of this year, with client deposits up 3.5% year on year and loans up 5%. Unsurprisingly, much of the past year has been spent addressing the bank’s sovereign exposure to Europe’s troubled periphery – with considerable success. By December BNP Paribas had taken a 75% provision against its entire Greek exposure and by April this year its entire exposure to Greece, Ireland and Portugal totalled €1.1 billion. Its Italian sovereign exposure was down from €20 billion to €12 billion at the end of the year, but it clearly has exposure through subsidiary BNL.

Losses on the sale of sovereign exposure and on deleveraging in general hit the corporate and investment banking business hard but it rebounded in the first quarter of 2012 to contribute €1.6 million to pre-tax profits compared with €46 million in the last quarter of 2011 and broke even at the end of 2011 while arch-rival Société Générale made a significant loss in this part of the business. BNP Paribas’ acceptable return on equity of 8.8% for 2011 is underpinned by a core equity tier 1 ratio under Basle 2.5 of 10.4% – the best of any big French bank.

BNP Paribas tops the DCM rankings in France this year, with a 14% market share. It underwrote €11.5 billion across four new benchmark issues for Cades and was strong among France’s biggest corporates – arranging Pernod Ricard’s inaugural US dollar issue, for example, and liability management exercises for such companies as GDF Suez.

BNP Paribas is also Euromoney’s M&A house for the year, having been involved in more than $70 billion-worth of completed deals during the period under review. This included advising Sanofi-Aventis on its $24 billion acquisition of Genzyme – a bumper deal that finally completed in mid-2011.

Société Générale CIB remained dominant in ECM in France over the past year – with a 24% market share. It has been instrumental on a range of offerings, from joint coordinator and joint bookrunner on PSA’s €1 billion rights issue to small-cap IPOs for Mauna Kea, DBV and EOS Imaging. It was active in a number of follow-on offerings and reopened the French equity-linked market in 2012 with the Nexans €275 million Oceane issue, which was combined with a buy-back.

It also arranged a successful rights issue following the demerger of Axway in order to separate its software activities from those of Sopra Group.

Best Bank: Deutsche Bank
Best Investment Bank: Deutsche Bank
Best Debt House: Deutsche Bank
Best Equity House: Deutsche Bank
Best M&A House: Rothschild

Buoyed up by Germany’s safe haven status, the German banking sector has arguably benefited handsomely from the government’s super-low borrowing costs and healthy inflow of retail deposits in the past year.

With 10-year and 30-year Bund yields at record lows and the government selling two-year bonds with zero coupons, this has, in turn, translated into lower funding costs for German banks – many of which are seemingly flush with liquidity.

Deposits in Germany rose 4.4% to €2.17 trillion at the end of April from a year earlier, according to European Central Bank figures, while deposits in Spain, Greece and Ireland shrank 6.5% to €1.2 trillion in the same period.

However, while German banks are experiencing inflows, further supplementing more than €1 trillion of liquidity from the ECB, acute concerns remain about whether or not they can withstand further shocks from the eurozone crisis.

In June, rating agency Moody’s downgraded six German banks – Commerzbank, DZ Bank, NordLB, LBBW, Helaba and the German unit of UniCredit – on such concerns, although it deferred judgement on Deutsche Bank to a later date.

Moody’s said German banks were still “meaningfully” exposed to structured credit, peripheral countries and problematic sectors such as shipping and finance, and that they had limited capacity to deal with losses, given weak profitability and comparatively small amounts of equity relative to total assets.

For Deutsche Bank, particularly, this last point might resonate. Deutsche has total assets of close to €2.1 trillion and total equity of €56 billion. These figures seen side by side are stark, but Deutsche would argue that it has ample capital and liquidity to satisfy international and domestic regulators.

In its home market, Deutsche Bank dominates banking and with the consolidation of Postbank now complete – in February Deutsche accumulated 93.7% of the voting rights in Postbank, giving it access to the retail deposit base – it commands the biggest private-sector retail bank in Germany, with 24 million private clients and €260 billion of retail deposits.

In investment banking, Deutsche Bank dominated too.

In the past year, the bank has extended its lead in the country and ranked top in fees, with income of €273 million, taking a market share of 15.1% – 1.4 points higher than last year and over €100 million more in fee income than its closest rival, JPMorgan.

Deutsche led the pack once again in debt and equity capital markets.

From Allianz’s €2 billion 30-year non-call 10-year subordinated bond – the largest subordinated bond issue since the 2008 crisis – to BSH Bosch’s groundbreaking Rmb2 billion ($314.4 million) multi-tranche CNH deal, and HeidelbergCement’s SFr150 million ($158.7 million) of high-yield bonds, Deutsche proved its strength in execution and diversity in DCM.

Similarly strong in ECM, where it commanded a market share of over 20%, Deutsche was involved in the big deals of the year including the largest equity-linked transaction since 2002 for Siemens, Commerzbank’s €11 billion capital increase and Porsche’s €5 billion rights issue – the largest capital increase in the European automotive sector since 1980.

In M&A, however, Deutsche slipped by the smallest of margins, enabling Rothschild to clinch first place by the value of deals advised during the period, according to Dealogic.

In what was a stellar performance, the independent investment bank – last year ranked ninth – advised on 24 deals worth a combined $21.8 billion, handing it a market share of 26.2%. Second-placed Deutsche took a 24.2% market share from 30 deals worth a combined $20.1 billion.

Among some of the standout deals, Rothschild advised Volkswagen on Scania’s €3.4 billion majority-stake acquisition in German truck maker MAN; exclusively advised Bosch on the $1.15 billion acquisition of SPX Service Solutions; and advised Labelux, a privately held luxury group, on the estimated $800 million acquisition of the high-end shoe and accessories company Jimmy Choo from TowerBrook Capital Partners.

As Euromoney went to press the depositor retreat from Greek banks was threatening to turn into a run. Between January 2010 and March 2012 one-third of all Greek bank deposits were withdrawn and there is now a distinct possibility that the sector will simply run out of cash. According to Bloomberg, deposits by businesses and households held in Greek banks fell by 17% (€35.4 billion) in 2011 and stood at €165.4 billion in March 2012. According to George Provopoulos, head of the central bank, as much as €700 million had been withdrawn by late May.

This is clearly taking its toll. In May the European Central Bank announced that certain “severely undercapitalized” Greek banks had been moved to emergency liquidity assistance (ELA) and therefore barred from funding through regular Eurosystem refinancing. Indeed, as Barclays analysts have noted, the provision of ELA has become systemic in Greece, constituting the main source of funding for its banking system.

In essence, the ECB, which is clearly frustrated by the lack of progress on Greek bank recapitalization, holds the future of the country’s banking sector in its hands. Greece would be forced to exit the euro if its banking sector were cut off from euro funding by the ECB. But it cannot provide funding via the ELA for ever. According to JPMorgan, Greek banks have only sufficient collateral for a maximum of €65 billion of additional borrowing from Bank of Greece’s ELA.

The merger of Alpha Bank and EFG Eurobank should have taken place last year in a deal that was seen as a defensive measure against just the kind of deposit outflows that have occurred recently. The merger, which was announced in August, was however put on hold by Alpha Bank once the implications of the private sector involvement in Greece’s sovereign debt restructuring became apparent. EFG Eurobank, which is the country’s second-largest bank, holds €6.9 billion in Greek government bonds while Alpha Bank has around €3.8 billion.

Citi has been in Greece since 1964 and now has a consumer bank network with over 700,000 customers. It is among the largest card issuers in the country and is the biggest co-brand and private label partnership provider in the market. Citi was the first bank in Greece to develop an open architecture investment platform and market a complete advisory offering for mass affluent customers and it launched e-commerce in branches this year.

Citi has also recently made substantial progress in investment banking, increasing its share of the M&A market from 6.18% in 2009 to 25% last year. It is also advising the Greek government on the privatization of its airports and the state lotteries concession. On the ECM front it has advised on two recent shipping deals: the $329 million IPO of Gaslog and a $90.5 million accelerated offering for Navios Maritime Partners.

Despite the progress that has been made in the sector, Irish banking still faces a tough road ahead. The economic deterioration in the country over the past year has had a direct impact on residential mortgage arrears, which continue to rise. In March, Ireland’s unemployment rate was 14.3%. AIB, EBS, Bank of Ireland and Permanent TSB hold 63% of all outstanding owner-occupied mortgages in the country – amounting to €71.8 billion. Some 12.3% of all Irish mortgages are 90 days or more in arrears and that percentage might well grow when many of the mortgages that were restructured in 2009 and 2010 come out of forbearance and re-enter arrears.

The €100 billion bailout of the Spanish banking sector that was announced over the weekend of June 9 has added fuel to calls for the terms of Ireland’s November 2010 bailout to be renegotiated.

Despite having received €85 billion, Ireland still needs €40 billion to cover its budget deficit and repay maturing debt obligations in 2014/15, and there is growing speculation that it might need a second dose of help.

The only Irish bank to have escaped nationalization, Bank of Ireland, was kept afloat by a €1.1 billion sale of a 35% stake to Fairfax Financial, Wilbur Ross, Fidelity Investments, Capital Group and Kennedy Wilson in July last year. The government retains a 15% stake. The controversial liability management exercises undertaken by AIB and Bank of Ireland infuriated subordinated bondholders but they resulted in the banks having core tier 1 capital ratios of 20.1% and 12.8% respectively by the end of the year.

Bank of Ireland’s July debt-for-equity swap added €1.98 billion to its capital cushion, and the bank has now raised €5.2 billion via discounted buy-backs and share swaps since 2009. It shed €8.4 billion of loans from its non-core portfolio last year, including commercial real estate, project finance and residential mortgage loans, and has inked the sale of a further €900 million. The bank’s underlying loss (which excludes one-time losses from loan sales) fell to €1.5 billion in 2011, down from €3.5 billion the previous year, and it bolstered liquidity by tapping the European Central Bank’s February three-year long-term refinancing operation for €4.8 billion.

Goldman Sachs has been intimately involved in the restructuring and recapitalization exercise that the Irish banking sector is embarked upon. It advised Bank of Ireland on its debt exchange in July, after having been retained by the government to advise on the capital-raising exercise for Allied Irish Banks, Bank of Ireland, EBS and Irish Life and Permanent following its March 2011 stress testing. Goldman has also been appointed by Ireland’s National Asset Management Agency to advise on portfolio loan sales.

While its main local rival delayed raising capital last year, Intesa Sanpaolo came quickly to the market, pricing a €5 billion capital raising in May 2011. Although all Italian banks remain exposed to any serious problem with the sovereign, that helped the bank into the comfortable category of having a 10.5% core tier 1 ratio (a 9.6% EBA capital ratio) at the end of the 12 months under review in March 2012.

Although the bank has taken goodwill impairments that dragged down accounting profits, its operating earnings look resilient, with operating income and margins both improving alongside cost efficiencies to offer shareholders the promise of a decent dividend payout ratio and of capital generation – in the absence of a dire economic outcome in Italy – to protect against rising non-performing loans.

The bank looks well funded from a liquidity and net stable funding ratio perspective, with a conservative leverage ratio by the standards of European peers at just 18.2x assets to tangible shareholder equity.

Time will tell how loan losses evolve in Italy, but in the most recent quarter Intesa Sanpaolo recorded net income more than 20% higher than in the first quarter of 2011, while its cost-income ratio reached an impressive 46%, down from 53% at the start of the period under review.

As well as increasing deposits in the first quarter, the bank was also able to fund in the wholesale markets. In February it became the first bank from the eurozone periphery able to place senior unsecured bonds with a maturity beyond that of the European Central Bank’s three-year long-term refinancing operation, selling 70% of a €1 billion five-year Eurobond to non-Italian investors. It has substantially increased unencumbered assets eligible with central banks.

As a leader in the retail, corporate and wealth management business with 10.8 million customers in Italy served through 5,600 branch networks, Intesa Sanpaolo will fare in future as Italy fares.

Credit Suisse has a strong team of investment bankers in Italy led by Federico Imbert and Guido Banti and wins the award for best investment bank for its strength in depth across a range of disciplines, including M&A advisory, capital raising and risk management advice.

It has a strong market share in trading Italian stocks, and this helped it to take senior roles in the syndicates of all the big bank rights issues of the past 12 months including for UniCredit, Intesa Sanpaolo, Banca Monte dei Paschi di Siena and Banco Popolare. It also pre-underwrote for some seven months the smaller restructuring rights issues for Fondiaria SAI and Milano Assicurazioni.

Credit Suisse successfully acted as sole bookrunner in the accelerated placement of LVMH shares on behalf of the Bulgari family, who used the proceeds to finance tax liabilities and other costs connected with the reorganization of their continuing shareholding in LVMH.

Credit Suisse’s M&A bankers were busy in the 12 months under review. The bank assisted Atlantia in the disposal of its 49.99% stake in the largest urban toll road operator in Chile, Grupo Costanera. The bank assisted private equity funds Investindustrial and Alpha in the disposal of Permasteelisa to Japan’s biggest housing and building materials company, Lixil, thus creating the worldwide leader in the curtain-wall sector.

In debt capital markets, Credit Suisse acted as joint bookrunner on Wind Telecomunicazioni’s €500 million-equivalent senior secured notes offering; it was lead-left bookrunner and joint global coordinator on Guala Closures’ €200 million senior secured notes offering; and was sole bookrunner for the SFr250 million dual-tranche deal for Enel – the first time an Italian corporate has accessed the Swiss franc bond market since 1996.

Bank of America Merrill Lynch wins the award as best equity house in Italy. It has distinguished itself as the international bank of choice to lead the large bank recapitalizations in Italy, having acted as the sole international global coordinator for both the UniCredit €7.5 billion rights issue completed in January 2012 and the Intesa Sanpaolo €5 billion rights issue in 2011.

In addition, the firm acted as sole international global coordinator in the first IPO priced in 2012, for Brunello Cucinelli (€174 million), launched in March 2012. The deal priced at the top end of the range and ended up covered 18 times on the institutional tranche – an extremely successful outcome for the first Italian IPO since summer 2011.

Best Bank: ING Bank
Best Investment Bank: BNP Paribas

ING Bank achieved something impressive with its earnings from its home market last year: it held them steady. In a tough environment, solid earnings and a strong capital and funding position have enabled the country’s largest bank to continue supporting customers. ING was the lead arranger of syndicated loans to domestic borrowers with a 10% market share from running the books on 26 loans worth $5.8 billion. That puts it well ahead of second-placed Rabobank, with a 7% market share from running the books on 23 deals worth $4 billion, and third-placed ABN Amro Bank, which had a 5% market share, having run the books on 18 syndicated loans worth $3.1 billion.

ING’s core tier 1 ratio is stable at 9.6% and the group’s commercial performance was robust in 2011, with full-year underlying earnings 15.1% higher than in 2010. Funds entrusted to ING grew by €8.1 billion, underscoring the bank’s renewed ability to gather deposits amid intense competition in its domestic market.

In retail banking, ING has focused on delivering easy-to-understand financial products – savings, mortgages, investment, payment accounts and consumer lending – at low cost, with direct banking still a big part of ING’s retail story. With 8.9 million clients in a country of 16 million people, ING now claims a more than 50% market penetration.

BNP Paribas wins the best investment bank in the Netherlands award as the signs begin to show that its recent investments in the country are paying off.

BNP Paribas has enlarged its staff in the country by 50% since the end 2010, and relocated its headquarters in Amsterdam to support this growth. The Dutch team has won over some 60 new corporate clients in the large to mid-cap segment, more than doubling the size of its client roster in less than two years.

The firm is renowned for its debt capital markets capabilities across Europe and this was well illustrated by its work with Heineken, the household-name Dutch brewer that has long accessed the debt capital markets without a rating, relying solely on the strength of its name. In March 2012, Heineken announced its first-ever public ratings (Baa1/BBB+ both stable). On the back of this, BNP Paribas supported Heineken to issue a highly successful transaction, extending its debt maturity profile with seven-year and 12-year tranches. The 12-year tranche marks the first non-telecom and non-utility transaction executed in the euro market since 2004 at this maturity.

BNP Paribas has invested in building up its corporate advisory and M&A business in the Netherlands, including bringing in Mark de Graaf as deputy CEO of BNP Paribas in the Netherlands and head of investment banking, having previously worked at ING, Citibank and Credit Suisse.

It takes a broad approach to corporate advisory for clients grappling with the challenges of access to financing across the capital structure. BNP Paribas advised Dutch housing association Stadgenoot on its successful application for a standalone credit rating. The rating was the first ever assigned to a housing association in the Netherlands, and at double-A with a stable outlook makes Stadgenoot the best-rated housing association in Europe.

Best Bank: Santander Totta
Best Investment Bank: CaixaBI

The eurozone crisis has had a profound impact on the Portuguese banking sector. The economic environment, market instability and a €78 billion bailout have all contributed to declining quality of assets, efficiency and profitability. No bank has been immune.

But one has coped better than its competitors. Santander Totta demonstrated this in two clear ways: first, as a flight-to-quality play, with deposits increasing by 12% in 2011; and second, in the stress tests by the Bank of Portugal in August 2011 and February 2012, where the bank was judged to have the best financial capacity to absorb future shocks.

Santander Totta was the only one of the big Portuguese banks to post a net profit for 2011.

Its core tier 1 ratio, at 11.2%, is nearly two percentage points higher than its nearest rival’s. Meanwhile the bank’s cost-to-income and NPL ratios remain the lowest in its peer group.

But just how difficult banking in Portugal has become is shown in other Santander Totta numbers: earnings per share down 85%; revenues down 32%; operating profit down 54% and a return on equity of just 2.9%.

In such a tough environment, investment banking activity in Portugal has been subdued.

Espírito Santo Investment Bank and CaixaBI are the two leading franchise in the country, often with little to choose between them.

Both have taken much of their activity over the 12 months under review from their parent banks: CaixaBI in the debt markets, and BES in the equity markets.

With activity in Portugal subdued, both firms have been looking to expand their offerings outside the domestic market; and on this score, CaixaBI edges it.

CaixaBI has been developing a cross-border strategy in order to lead a dynamic business platform between Portugal, Spain, Brazil and Portuguese-speaking Africa, providing clients with an international dimension in any of these geographies.

This was particularly evident in the role CaixaBI played in the $4.8 billion capital increase in Petrogal Brasil (Galp Energia Group) and in the $3.3 billion reprivatizations of EDP and REN.

Best Bank: Caixabank
Best Investment Bank: Goldman Sachs

The problems in the Spanish banking sector are well documented but much harder to solve than to analyse. The up to €100 billion support mechanism offered by the EU in June showed just how bad these difficulties have become.

Many of the problems are at their worst in the savings bank (caja) system. Although no Spanish bank can avoid the triple whammy of soured property loans, poor economic performance and high unemployment, Spain’s big two banks – Santander and BBVA – are not under threat. These are very well run banks coping much better than the rest of the sector in Spain, and have been recognized in these awards many times in previous years.

However, this year the award goes to a bank that found itself in difficulty and took bold, swift and appropriate decisions that makes it the only bank to give the Spanish savings bank system a good name.

CaixaBank was formed in 2011, when the real estate and industrial portfolios of La Caixa were split off into an unlisted entity.

The new-look CaixaBank has made an impressive start. During 2011, it increased domestic market share in deposits and loans (to 10.3% and 10.4% respectively). At the end of 2011, CaixaBank’s NPL ratio was 4.9%, against the Spanish banking sector average of 7.6%.

At March 31 2012, the core tier 1 capital ratio stood at 12.4%, with a total tier 1 capital adequacy ratio of 13.1%, 29 basis points more than at December 2011, with €6.8 billion of surplus capital under Basle II requirements.

Management hopes that the bank’s position in Spain will be further strengthened by its merger this year with Banca Civica to create the leading retail bank with the widest commercial network and the strongest balance sheet in the Iberian peninsula. Annual cost savings starting this year, and of €540 million from 2014, and income synergies, will contribute to enhance profitability. The merged entity will have total assets of €342 billion, net customer loans of $231 billion and deposits of €179 billion. The combined branch networks will also reinforce CaixaBank’s position as the leader in client penetration, with a 16.2% market share.

For a country in crisis, Spain’s investment banking markets have proved remarkably busy. Activity has been relatively strong across debt, equity and M&A, much of it related to solving the problems in the Spanish banking sector.

Deutsche Bank is the momentum firm in Spain, increasing market share in most sectors. But the best investment bank award goes to Goldman Sachs, which has been the adviser of choice on many of the landmark deals.

These include its role as leading bank in the most prominent M&A transactions, such as the €15 billion Telesp/Vivo merger, the €3.7 billion Cepsa acquisition by Ipic, and the €2.6 billion Repsol buy-back from Sacyr’s lenders. Goldman has played a critical role in the restructuring of the Spanish banking sector. Deals include the €6 billion merger of BBK/Kutxa, the €1.9 billion formation of CaixaBank, the €1.3 billion acquisition of Banco Pastor by Popular, and the €1.7 billion recapitalization of CatalunyaCaixa.

In spite of two large IPOs being pulled during the period (Loterías del Estado/Spanish government, Atento/Telefónica), Goldman Sachs remained a leading equity franchise thanks to landmark block trades such as the €1.3 billion Repsol ABO and the €1.7 billion Amadeus blocks.

In debt capital markets, not always Goldman’s strongest suit, the firm has developed a strong position in the Spanish public, FIG and corporate sectors. Notable transactions included reopening the syndication market for Kingdom of Spain in a €4 billion transaction, with a very large percentage of international investors participating. That market had been closed for 11 months.

Best Bank: UBS
Best Investment Bank: Credit Suisse

UBS has suffered more than most banks through the financial crisis. Under recently departed chief executive Oswald Grübel, and now his successor, Sergio Ermotti, the bank has refocused on its core strengths and there are clear signs it is now starting to regain its former standing.

No market is more important to UBS than Switzerland, both in terms of stability of revenues and global brand strength, and the bank has re-emerged as the clear leader in Swiss banking. Switzerland accounted for more than 50% of UBS’s pre-tax profits in 2011 but accounts for less than a quarter of the group’s risk-weighted assets. Despite a challenging environment, UBS Switzerland increased its pre-tax profits by 8% last year.

In retail, UBS reported a record year, with net new client assets rising by 76%, its best results since 2007. Net new money in wealth management rose 47%, and corporate deposits rose by 9%. And it is in Switzerland that UBS is demonstrating that it can make the most of its entire franchise, with cross-selling between its wealth, asset management, retail, corporate and investment banks accounting for 20% of all its revenues in Switzerland.

Credit Suisse continues to dominate the investment banking markets in Switzerland, coming top in all the key league tables across debt, equity and M&A, and successfully executing the most complex and innovative transactions in the market.

Credit Suisse was exclusive financial adviser to Synthes in its $21 billion cross-border sale to Johnson & Johnson. It was also selected to advise on and execute the two largest monetization transactions – DKSH’s IPO, which formed the nucleus of the founding families’ planning strategy, and the sale of Nycomed, which was Switzerland’s largest financial sponsor exit during this period.

In debt capital markets, the firm maintained its top league table position in all market segments and displayed leadership in launching innovative structures, particularly in the hybrid capital segment of the market. The team played a leading role in the domestic corporate debt capital markets, bringing several large and mid-cap clients to the market for the first time. It also excelled with innovative offerings, such as the hybrid for Swiss Re featuring a contingent conversion to equity clause as well as an ‘at market price’ discretionary stock settlement.

Furthermore, Credit Suisse was instrumental in the development of emerging markets issuance in the Swiss franc market, achieving a share of over 50% through landmark transactions for Russian, Latin American and Indian names.

Over the past 12 months, under the leadership of new chief executive Ana Botín, Santander UK has implemented a change to its strategy. Having grown through acquisition and been rigorous in its approach towards efficiency, the bank has attempted to add a new string to its bow: to become a bank that clients choose to do business with.

In retail, that has meant launching innovative new products that appeal to customers. It is bearing fruit, with 830,000 bank accounts and 543,000 new credit cards opened over the past 12 months.

In corporate finance, it has focused heavily on the SME sector. It has increased corporate lending by 14%, a higher growth rate than any of its peers in a sector that contracted on average by 7%.

While growing its business, Santander has maintained its rigorous control on costs. For the fourth year running it had best in class efficiency, with a 44% cost-income ratio compared with a peer average of 59%; a high core tier 1 capital ratio of 11.4%; the highest return on equity among its peers, at 16% to Q1 2012; and an NPL ratio that amounts to only 1.93% of assets.

Barclays has found itself the subject of much more negative mass media coverage than it would have liked in the UK over the past 12 months, but its investment banking activities in its home country have gone from strength to strength.

Barclays has long been a top debt house in the UK, and in a stop-start 12 months for the sector it continued to outperform, leading the way in both corporate and FIG issuance. Barclays was also at the forefront of financing for the social housing sector, which has seen over £1 billion of issuance in Q1 2012, more than in the entirety of calendar 2011.

But it is in its relatively new sectors of equity and M&A that Barclays outperformed expectations. In the year ending March 2012, the firm was ranked third in the UK M&A league table (up from 12th the previous year) and increased market share to 20.6% from 10.9%. Key transactions included advising BHP Billiton on its $15.1 billion acquisition of Petrohawk Energy Corp; and Hewlett Packard on its £7.1 billion acquisition of Autonomy, on which it was also sole arranger and sole underwriter for a fully committed £5 billion bridge facility to support the transaction.

In ECM, in a year when total UK volumes fell 28%, Barclays was the second-busiest house for equity transactions over the period, acting as a bookrunner on 11 offerings. Important deals included secondary placings in Henderson, Telecity Group, Vodafone, Aberdeen Asset Management and Bowleven.

During the past 12 months RBS gave up on its ambitions to be a full-service investment bank. FICC is now at the heart of RBS, and in debt capital markets it continues to punch its weight.

Nowhere is this more the case than in the UK, where RBS was the number one UK bank for corporate bonds (53 deals worth $9.6 billion) and loans (61 deals worth $12.5 billion) during the 12 months under review, according to Dealogic. Highlights included its role as bookrunner on SABMiller’s $12.5 billion takeover of Foster’s. It was also lead left on a $1 billion private placement for Compass, at the time the largest such deal since 2006.

RBS also showed its hand at innovation. It was lead manager on the first-ever dual-tranche whole-business securitization and high-yield debt issuance for Center Parcs; provided debut debt financing for Direct Line ahead of its planned IPO; and launched the first sterling corporate tender offer of 2012 for Severn Trent.

Morgan Stanley was on many of the UK equity deals that mattered over the past 12 months. Most high profile was the complex and at times controversial $10 billion IPO of Glencore, the largest ever IPO on the London Stock Exchange, in which Morgan Stanley acted as joint sponsor, joint global coordinator, joint bookrunner and sole stabilization agent. It followed this up with a $1.1 billion convertible bond monetization in Glencore, a secondary sell-down of Glencore pre-IPO convertible bonds and purchase of shares, both on behalf of First Reserve.

The firm also reopened the European equity markets in October 2011 with a £491 million offering for Polymetal International, as part of a wider re-domiciliation, premium listing on the London Stock Exchange, exchange offer and mandatory tender offer. This gave Polymetal a stronger acquisition currency and capital markets profile, as well as an improvement in trading liquidity and access to a wider shareholder base.

Morgan Stanley was also left lead on the $588 million IPO of Global Ports, which was successfully completed despite challenging market conditions and a very high ratio of pulled IPOs in Europe and Russia in 2011 and, as recently as pricing week, two further pulled IPOs in Europe.

Goldman Sachs continued to attract a series of high-profile UK M&A mandates over the past 12 months. It was easily the number one M&A adviser for completed deals, with a market share nearly 10 percentage points higher than second-ranked JPMorgan. The firm advised on each of the top 10 completed M&A transactions in the UK in the period, across the full spectrum of roles including sell side, buy side, defence, reverse takeover and demerger.

Highlights included its role as defence adviser to Charter on an unsolicited bid from Melrose, and subsequent $2.4 billion sale to Colfax; a key role in the demerger of Punch Taverns and creation and listing of Spirit; and the role of financial adviser to Autonomy in its sale to Hewlett Packard.

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