Best Bank in United States In its core mortgage business it has gained a winning market share as competitors, such as Bank of America, have pulled back. Default rates have decreased, and it is now seeing the financial payoff of its Wachovia integration. Over the past three years the bank has one of the highest percentages of funding from deposits of the largest banks and the cheapest average cost of deposits – that led to a net interest margin of 4.16% in the first quarter of 2012, the highest among its peers. After US Bank, Wells Fargo has the highest return on assets and return on equity among the largest 10 banks in the US. With public pressure on US banks to increase their lending, Wells Fargo has been the largest lender to small businesses, with $1 billion in small business appreciation loans last year, and was the highest among its peers in the first quarter of 2012. Wells Fargo chairman and chief executive John Stumpf says: “Our success is based on [our clients’] success, and 2011 was no exception even with the changing banking landscape and economic headwinds that we all faced.” Stumpf might well be glad the firm is still on the periphery of Wall Street. Investment banking has been plagued with highs and lows over the past 12 months. Trading losses, kiss-and-tell stories about client treatment and continuing lawsuits, together with lower volumes, jittery clients and continued economic uncertainty, have left bankers in a state of bewilderment. And earnings are not looking great either. Revenues from US clients were down about $8 billion year on year for the second half of 2011 and the first half of 2012 combined.
Best Investment Bank and Risk Adviser in United States Barclays is a leader in covered bonds, leading a $5 billion covered bond for TD Bank over the period. In investment grade debt it has led the last six deals by GECC – more than any other bank. In esoteric ABS, the bank is the leader in the market, with deals for Miramax and Dominos. Together with Deutsche Bank it successfully bid for a portion of the Maiden Lane III legacy AIG assets that were auctioned by the Fed in April this year. In ECM, Barclays ranks seventh in the league tables and has a way to go to bring itself up to competing with such stalwarts as Morgan Stanley and JPMorgan. But in equity flow and hedging for clients the bank is a leader. It has a high share of US flow products and jostles for first place in block trading with Deutsche Bank. The bank advised Capital One when it needed $2 billion in equity to finance its acquisition of ING, suggesting instead an equity forward structure to de-risk the deal, showing its equity risk management capabilities to be top-tier. In M&A, Barclays now ranks fourth in the league tables and last year was third for full-year 2011 – the only non-US bank to make that position in 12 years. Barclays was the sole underwriter of $13 billion of committed acquisition financing for the Kinder Morgan/El Paso transaction, the largest acquisition-related financing of the period and the largest ever sole underwriting to a non-investment-grade company. The bank was also financial adviser to Hewlett Packard in its subsequently troubled acquisition of Autonomy last August. It incorporated an FX hedge and a fully underwritten $8 billion bridge facility. Barclays is also a leader in the LBO M&A advisory sector.
The bank’s commitment to the US is exemplified by the addition of another global senior manager to the country – Tom Kalaris is now going to be splitting his time between New York and London as executive chairman of the Americas as well as overseeing wealth management. Jerry del Missier, who has overseen the corporate and investment bank through its Lehman integration and was recently appointed COO of the Barclays group, says the bank is well positioned. “We came out of the crisis in a stronger strategic position and that has allowed us to continue to win market share and build our franchise. Keep in mind that the US is the largest investment banking, wealth management, credit card and investment management market in the world, and in terms of fee share will remain the most dynamic economy in the world for many years. As a strong global, universal bank operating in a competitive environment that is undergoing significant retrenchment, we like our position.”
Best Debt House in United States The bank’s ability to execute across the globe and in every market has ensured that it is consistently reappointed by issuers. In leveraged finance, for example, BAML has bookrun Amgen’s seven largest financings, including a $3 billion senior notes offering in June last year. In November it was bookrunner on Amgen’s multi-financing and multi-currency transaction in which the company raised $7.5 billion across three markets in three weeks to fund its $5 billion leveraged recapitalization. In the yankee bond market, BAML is a leading player. It was joint bookrunner and billing and delivery agent on Rabobank Nederland’s $1.5 billion 30-year offering last May and then led Rabobank’s $3 billion 10-year in February this year. When it comes to complex transactions, BAML is the choice as left lead. Window and door manufacturer JELD-Wen was the only transaction rated B3 and lower to price between early September and October. BAML led its $460 million offering of senior-secured second-lien notes. The rescue financing and a capital infusion by Onex enable JELD-Wen to continue operating during one of the market’s lowest points.
Best Equity House in United States Facebook aside, Morgan Stanley has dominated US ECM over the past 12 months, leading the league tables. It has invested in its equity derivatives business serving sovereign wealth funds needing to hedge, and has built out its pre-IPO financing group. Although the bank is known for its prominence in the high-profile and active tech/social media market, head of global capital markets Raj Dhanda points to BlackRock as an example from outside those sectors.
“BlackRock hired Morgan Stanley when Barclays was selling a stake – a great sign of their confidence in our equity cap markets expertise, trust and advice and distribution both institutional and retail,” he says. Morgan Stanley was also the top revenue earner in equity sales and trading globally last year.
The market environment has also led to reduced volumes in M&A. US M&A deal volumes are around 25% down year on year, yet one bank has increased its market share and been adviser on more deals than any other. Goldman Sachs has dominated US M&A over the past 12 months, with a market share of almost 30% – strides ahead of its nearest competitor – and wins the award for best M&A house in the US. Its longevity and depth of relationships with corporate clients have secured it an advisory position on 170 deals for the 12-month period starting May 2011. “The league tables depict volumes, but I would also observe that the number of transactions Goldman Sachs works on speaks to the depth of our experience across industries and transaction types,” says Michael Carr, head of Americas M&A. “We cover more sectors and are not reliant on any part of the economy or industry group. That experience appeals to clients.” Indeed in a turbulent market, corporates have been cautious. “Corporates are opting for deals where the other side is a known entity – a company they are intimately familiar with,” adds Carr. That was the case for component manufacturer Eaton’s acquisition of electrical equipment company Cooper in May this year, which had been expected by the market for some time. Goldman Sachs was adviser to Cooper on its $11.8 billion sale. The investment bank was also an adviser to Petrohawk Energy on its $15.1 billion sale to BHP Billiton, ensuring it one of the largest premiums an oil and gas company has ever received. In innovation and complexity, Goldman Sachs also excels. It advised Kraft on its restructuring where it created two securities from one to meet the needs of different types of shareholders – those interested in a developed business and those wanting to invest in the growth business of Kraft’s snack foods. The deal was also a tax-free spin-off. It advised Tyco on its combination of its flow-control business and Pentair in an all-stock merger – also a tax-efficient structure.
Best Flow House in United States
In 2011 the bank also launched the first US inflation breakeven exchange-traded product taking out exposure to rates. In equities, Deutsche Bank is number one in the US block-trading league tables, with over $4 billion of deals in 2011, and was left bookrunner on GlaxoSmithKline’s record Quest Diagnostics trade. In commodities, the bank is on a growth trajectory. It expanded its physical business while other firms are pulling back. Although the wind energy theme continues, the past 12 months have been dominated by solar projects. “It is a new asset class; in an environment where investors are cautious, we have committed resources to educating investors and ensuring them comfort,” says Nasser Malik, managing director and head of global project and infrastructure finance at Citi. Topaz Solar Farms, for example, was rated by all three ratings agencies and raised $850 million in a 144a bond financing that had been upsized. Citi was also a lead on the $1.74 billion Desert Sunlight Solar Project, the largest Greenfield renewables project finance deal ever. The structure of the deal transformed non-standard 80% guaranteed instruments into fully guaranteed and non-guaranteed instruments that would be well received by the bond and bank markets, resulting in efficient execution and cost-effective funding.
With natural gas prices low, renewables have been less attractive and Citi has been at the forefront of building hedges into project financings. BAML has committed heavily to cash management over the past three years, investing in its platforms and ensuring it is staffed with ex-treasurers and consultants who can help clients save money and better manage their treasury functions. The firm hosts regular regional events with treasurers of US firms. Over the past year, BAML has continued to invest in its global cash management platform, adding capabilities in Asia, EMEA and Latin America. The firm has added more than 100 technology staff in Asia, for example. The strength of its US platform combined with its international capabilities has won favour with US multinationals. Paul Simpson, head of global transaction services, says: “Many of the US multinationals would typically choose a US dollar provider and a separate euro provider. Given the volatility in Europe, that trend is reversing and now many US firms are tapping us to be their eurozone provider as well.” In Europe, new account opening among multinational corporations is up by more than 40% year on year.
Best Bank in Canada Considered one of the world’s safest banks, TD is the only bank with a triple-A rating from Moody’s. It had tangible common equity comprising more than 85% of tier 1 capital at the end of the first quarter of 2012, and has now exceeded the 7% Basle III requirement on a fully phased-in basis. In 2011, TD’s personal and commercial lending grew by 8.2% in Canada, which is almost 50% higher than the average of its Canadian peers. Much of its success has been through its commitment to customers, evidenced in its seven-day banking policy across 300 of its Canadian branches. In December, TD completed the acquisition of MBNA Canada’s credit card portfolio. MBNA Canada was the largest MasterCard issuer and the fourth-largest credit card issuer in the country. The acquisition expanded TD’s market share and now positions the bank as the number one card issuer in Canada.
“We continue to strategically invest in our businesses and leverage our competitive advantage in service and convenience to win customers and take market share” says Ed Clark, group president and chief executive of TD Bank Group. “At the same time, given the economic environment, we are also focused on permanently lowering our cost structure, which will have the added benefit of enhancing the overall customer and employee experience”. The firm also advised on the C$7.3 billion cross-border acquisition of Equinox Minerals by Barrick Gold. “It’s certainly been more of a challenge with the slowdown in M&A and new issue equity,” says Doug Guzman, head of global investment banking at RBC Capital Markets. “However, the strength of our North American business has provided the foundation for us to selectively add talent and extend our product range to effectively serve our global client base and increase our market share.” In ECM, RBC CM also ranks first in Canada. During the period, it was an underwriter for 88 transactions, raising C$7.1 billion, and led the Canadian equity capital markets with a 19% overall market share of new issues. The bank was lead left and global coordinator on Husky Energy’s C$1 billion follow-on cross-border common shares offering. The transaction was the largest non-self-led Canadian follow-on offering in the past year. Finally, in the domestic debt market, RBC CM had a market share of 23.6% for all Canadian debt deals over the period – 8% more than its nearest competitor. It is the leading bookrunner for government deals, and was the most active dealer for Canada Housing Trust’s deals over the period. The bank also led deals for foreign financial issuers looking to diversify sources of funding, such as Wells Fargo’s C$1.5 billion five-year bond, and Manulife’s sub-debt offering. It is also the country’s leader in project finance deals, high-yield deals and pension deals. |
