Awards for Excellence 2014: Best global investment bank

Best global investment bank: Bank of America Merrill Lynch

Cast your mind back five years, to a banking industry still reeling from the after-effects of the sub-prime crisis. Most talk was merely of survival, but occasionally the discussion would turn to which banks would be the winners once the crisis abated. 

You would have struggled to find anyone, certainly externally, and often internally, who would have suggested that the recently rebranded Bank of America Merrill Lynch would count among the potential long-term winners.

When rivals weren’t worrying about the dire consequences that would afflict the industry as a whole if BAML went under, which still seemed highly possible at the time, they considered the bank a laughing stock. They chuckled about the huge clash of culture between two very different firms, the fall-out from two closely overlapping FIG businesses, the unwieldy size of the institution that now existed, the lack of knowledge of international markets from some senior executives based in Charlotte, or even just the rather convoluted name that would never catch on.

Bank of America Merrill Lynch would never be a global contender in investment banking, the critics said.

Tom Montag: Skill as much as advice gives the bank the edge

Around the same time, a new management team was starting to take shape, coalescing around the leadership of Tom Montag – an outsider who had spent his career at Goldman Sachs, where he had been co-head of the securities division. 

This team rightly identified that the firm first needed to punch its weight in its core US franchise, and did so relatively quickly. The business was undoubtedly helped by the fact that, for much of the next few years, the US markets provided the lion’s share of global investment banking fees. About three years ago, BAML also began to make inroads in its European business and is the leader for investment banking fees in Latin America. 

It has been a steady build, but Bank of America Merrill Lynch is clearly one of the winners in investment banking in this difficult, post-crisis era. 

The firm continues to leverage its financial muscle through its big balance sheet and ability to lend in size, and as Montag is quick to point out, financing is as much a skill as advice.

But any jibes that BAML’s position today owes more to its lending power than traditional investment banking credentials of providing smart solutions to clients are misplaced and out of date. 

For the past 12 months, it has held top-three positions in key areas such as global investment banking fees, investment grade bonds, leveraged finance and in securitization. It ranks fourth for ECM fees, and is a clear top-five mergers and acquisitions adviser globally.

It’s not just about rankings. A firm can only really be considered successful if it brings all of its abilities to the table for its clients. BAML can. 

A look at some of the deals it has taken a lead role on over the past year tells this story eloquently. When Liberty Global bought Ziggo in a €10 billion deal, BAML was there from the start. It was the only investment bank acting in both lead M&A and financing roles. 

It also played a key role in two of the marquee transactions of 2013: as financial advisor to Silver Lake Partners and Michael Dell on its $24 billion buy out of Dell Inc; and in the same role on Verizon’s $130 billion acquisition of Vodafone’s stake in Verizon Wireless, where BAML also committed 15% of the $61 billion bridge financing. 

But the firm’s business success is far from confined to the landmark US deals. It was financial adviser to Bank of Tokyo Mitsubishi on its $5.6 billion complex takeover of Thailand’s Bank of Ayudhya. It was a global coordinator on the biggest-ever follow-on deal in Mexico, a $2.5 billion deal for Banorte. And it was joint bookrunner on the two sales to date by UKFI of its stake in Lloyds Banking Group, worth a total of $12 billion.

These investment banking capabilities increasingly go hand in hand with the growing strength of BAML’s transaction services business, giving the bank deeper relationships with its core clients. 

Work still needs to be done. The bank is not as strong a player in global flow businesses as it would like to be. Despite some recent successes, it is not as strong in Asian advisory and capital markets as it should be. It also needs to demonstrate that being most things to most people in most places is a sustainable business model at a time when many banks define themselves not just by what they do, but also by what they don’t do. 

But Bank of America Merrill Lynch is now a clear global contender. And, given its provenance and recent history, that is probably its greatest achievement of all.