AfE 2016 logo-196 135 Regional awards Press release View full 2016 results
Austria Belgium Cyprus Denmark Finland France Germany Greece Iceland Ireland Italy Luxembourg The Netherlands Norway Portugal Spain . Sweden Switzerland UK
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Austria Best bank: Bawag PSK Best investment bank: JPMorgan |
Austrian market leader Erste Bank posted another set of healthy results in 2015 but the standout story of the year, in terms of both growth and profitability, belonged to Bawag PSK. The private equity-owned bank saw its bottom-line result jump by 26% year-on-year to €418 million, giving a sector-beating return on equity of 16.2% on the back of higher core revenues, lower operating expenses and a dramatic reduction in risk costs.
In recent years, Bawag has steadily worked to reduce its exposure to non-core markets and business lines, scaling back lending in central and eastern Europe, selling its asset management arm and discontinuing propriety trading. This has been matched by a renewed focus on expansion in the domestic Austrian market and in particular the retail segment, where Bawag last year managed to increase lending by more than 10% and grab an extra 1.2 percentage points of market share.
The bank has also boosted its Austrian leasing business through the acquisition in October of the leasing operations of failed lender Volksbanken. Meanwhile, an efficiency drive saw core operating expenses reduced by 10% and a further five percentage points shaved off Bawag’s cost-to-income ratio.
Capitalization is also becoming a key strength of the bank. Even after allowing for the payment of a €325 million dividend, Bawag’s fully loaded tier-1 and total capital ratios came in at 13.1% and 16% respectively at end-December. These achievements were recognized by Moody’s, which has raised Bawag’s rating twice in the past 12 months. The bank is now rated A3 with a positive outlook, making it one of the highest-rated lenders in Austria.
Investment banking flows remained muted in the awards period, making picking a winner particularly challenging. Local players featured prominently in debt capital markets, with Erste ranking second only to HSBC, while M&A was dominated by global banks and product specialists. On balance, Euromoney felt that the bank that performed best across all asset classes was JPMorgan.
The US house won mandates on six global bond deals in the 12 months to March, including a rare corporate transaction for Uniqa Insurance Group, and was ranked in the top five for M&A. The bank also acted on one of a tiny handful of primary equity deals, an accelerated bookbuild for real estate developer Buwog.
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Belgium Best bank: KBC Best investment bank: Deutsche Bank |
The years after the crisis have seen a convincing return to health by Belgium’s biggest and best bank. It has sold assets from Serbia to Slovenia, as well as what was a nine-country private-banking operation. In total it has sold 25 businesses, according to data from Berenberg.
Those sales have helped put KBC in the top quintile of European banks in terms of its tier-1 ratio – 14.9% at the end of 2015. Robust capital is in turn helping convince investors it can afford generous dividend payments, and it is now one of most highly valued European bank stocks. By market capitalization, under CEO Johan Thijs, KBC is bigger than the biggest banks by assets in Germany and Italy.
Specifically in 2015, net profits rose 24% to €2.6 billion, with return on equity a stellar 22%. Importantly, 2015 was also the year that the bank repaid its outstanding government debt, five years ahead of schedule, with a €2 billion payment to the Flemish regional government in December.
It is proud of its status as a digital bank, ploughing in €240 million over the past two years in its multi-channel offering, including video calls, and bringing more loans and insurance sales online. It says the proportion of its customers using mobile and internet banking is higher than any other bank in Belgium.
Overall, KBC appears to have convinced the market that it has recognized and acted on the margin pressures facing European banks. Specifically in Belgium, which accounts for two thirds of its pre-tax profit, according to CreditSights, it had a cost-to-income ratio of 50% in 2015, even while it posted a healthy increase in market share in loans and deposits and maintained a low non-performing loan ratio of 2.2%.
The question is now, given its high capital, will it return to the M&A game? Analysts suggest there could be acquisitions in its core markets, which include the Czech Republic, Bulgaria, Hungary and Slovakia.
Meanwhile, the firm that used to be the continent’s preeminent investment banking house, Deutsche Bank, clearly still deserves that name in Belgium. The bank’s activity spread to prominent deals across all areas, above all advising AB InBev on its $125 billion acquisition of SABMiller.
Deutsche Bank was global coordinator on the Belgian brewer’s seven-tranche $46 billion bond issuance in January – one of the biggest bonds anywhere in the world – and its €13.25 billion senior note two months later. Deutsche was also sole bookrunner on the same client’s $565 million formosa bond in January 2016. It further advised AB InBev on the sales of its Peroni, Grolsch and Meantime brands.
But it was not just the AB InBev deals. Deutsche was bookrunner on Telenet’s €1 billion facility to support the acquisition of mobile operator Base, and left-lead on the €290 million bridge facility behind Lone Star Funds’ acquisition of carpet and rugs firm Balta. It is also advising food retailer Delhaize on its €10 billion all-stock merger with Royal Ahold, across the Dutch border.
In equity, aside from helping AB InBev’s Johannesburg listing, Deutsche was sole global coordinator on Nyrstar’s €274 million rights offering, making use of its own international commodities expertise.
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Cyprus Best bank: Bank of Cyprus |
The extraordinary story of the turnaround at Bank of Cyprus has been told in detail by Euromoney. The recovery has continued over the 12 months of these awards, as it posted a return to profitability for the 2015 financial year, making €624 million, and delivered a cost-to-income ratio of 40%. It also reduced its non-performing loan portfolio by €1.3 billion, increasing coverage to 48%, while its tier-1 capital ratio stood at 14% (well above the regulatory minimum of 11.75%).
The past year at Bank of Cyprus has also seen the disposal of its last and biggest non-core international operation, Russian lender Uniastrum.
Despite the removal of capital controls in Cyprus – a step which followed the unprecedented bail-in of depositors – Bank of Cyprus’ customer deposits (adjusted for the Russian bank disposal) rose an impressive €1.56 billion in 2015. The loan-to-deposit ratio fell from 141% at year end 2014 to 121% at year end 2015. Emergency liquidity assistance fell from €6.9 billion to €3.3 billion in the year to the end of March 2016.
The awards period ended with a bang, as the lender announced on March 31 its intention to list in London to boost liquidity and visibility. It made the announcement on the same day that Cyprus’ international bailout programme officially ended.
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Denmark Best bank: Danske Bank Best investment bank: Nordea |
Danish banks have had long experience of a challenge now spreading across Europe: negative interest rates. Financial results in 2015 and the first quarter of 2016 showed special resilience within Denmark at the country’s biggest and best lender, Danske Bank.
Danske’s net profit before goodwill impairments – related to its operations in Finland, Estonia and Northern Ireland – rose 36% to DKr17.7 billion ($2.7 billion). Its return on equity subsequently increased from 8.6% to 11.6%.
Resilient revenues, lower costs and, above all, lower loan impairments caused the rise in Danske’s profit. Importantly, fee income demonstrated strong growth, making it one of the top European banks by share of fee income, according to KBW. Operating expenses fell 4%, while the cost-to-income ratio before goodwill impairments fell below 50%.
Danske’s share price was consequently more resilient than almost any other bank in Europe during the awards period, barely moving from its level a year earlier, compared with large drops elsewhere in Scandinavia and much bigger falls in the eurozone.
Its valuation ended the period comfortably above book value, and tier-1 capital rose to 16.1% in 2016 from 15.1% a year earlier, while loans rose 3% and deposits rose 7%.
In digital banking, it launched Sunday.dk, a website that helps consumers search the housing market, targeting homes suited to their financial means, and allows them to get an instant commitment to a loan against the property. It also launched the pilot version of a new treasury product, In-house Bank, designed to help international corporate clients manage internal foreign exchange and payments.
In investment banking, it is Danske’s rival Nordea that stands out. Its work included a DKr5 billion accelerated bookbuild for transport firm DSV on which it was global coordinator, and a €1.3 billion acquisition financing for the same client, which it also coordinated. The overall financing supported DSV’s acquisition of UTI Worldwide, bolstering DSV’s position in the global transport sector.
Nordea also acted as adviser on the sale by a group of Danish banks of Bluegarden, a payroll solutions firm, to Marlin Equity Partners. It also helped arrange the financing for that deal.
Nordea’s other equity deals included acting as global coordinator on the DKr4 billion deal for Scandinavian Tobacco Group and acting as joint bookrunner on the DKr2.7 billion accelerated bookbuild in ISS. This completed the exit of Ontario Teachers’ Pension Plan from the facilities business, on whose €500 million bond in November Nordea also acted as joint bookrunner.
The bank’s other financing activities saw it coordinate the establishment of €1.75 billion in new revolving credit facilities for Dong Energy, ahead of its IPO.
It also arranged debt totalling DKr1.1 billion to fund private equity firm EQT’s acquisition of housing developer HusCompagniet and was joint bookrunner on €1.5 billion in three- and six-year bonds for shipping firm Maersk.
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Finland Best bank: Nordea Best investment bank: Citi |
Despite a tough economic environment, Finland’s second biggest bank, the local division of Nordea, posted a strong set of financial results in 2015. Operating income increased 9% to €2.5 billion, while profit before tax increased by 24% to €1.4 billion. Return on equity reached 9.6% and the cost-to-income ratio fell to 40% from 48% in 2014.
While Nordea also has a strong share in wealth management and wholesale banking in Finland, its market share in mortgages, lending and deposits remains around 30%, with 2.9 million household customers across 170 locations, although it is putting more emphasis on digital channels. The bank added more capacity to online meetings and in its call centre, but nevertheless saw full-time employee numbers decline.
Mobile banking logins doubled in 2015, as the bank introduced fingerprint identification and the ability to logout by shaking the phone. Its Startup Accelerator programme saw Nordea invite 12 startups into the bank’s headquarters to develop new digital products and services, selected from 170 applicants from around the world.
In investment banking, Citi benefits from being a rare example of a global bank with a footprint in Helsinki. It advised on a number of big and complex deals during the awards period. Perhaps most importantly, it was adviser to Nokia in its €14.7 billion acquisition of Alcatel-Lucent, a transformative move for the Finnish telecoms technology firm, and one of the biggest European M&A deals during the period.
The Nokia deal was not the only multi-billion-dollar Finnish deal for Citi. There was also Fortum’s €6.6 billion divestment of its Swedish electricity distribution network, sold to Borealis, and following Citi’s work on Fortum’s divestment of similar assets in Finland in 2014.
Citi’s bond business in Finland included advising on Sampo Group’s €500 million senior unsecured notes in February, on which it was joint bookrunner, and Caruna’s €1.1 billion private placement in January, in which it was co-placement agent. In the sovereign and supranational sectors, it managed deals for Finnvera, Nordic Investment Bank and the Republic of Finland’s $1.5 billion offering in May.
The US bank was also sole adviser to Blackstone on the €900 million acquisition of Certeum, sole adviser to Sanoma on the divestment of its Russian business and adviser to Stora Enso on its divestment of the Arapoti paper mill in Brazil.
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France Best bank: BNP Paribas Best investment bank: Société Générale |
It has become fashionable among analysts to knock the French banks. Not only are they based in a low-growth home market, they are supposedly unfashionably large and complex. But of the big three eurozone economies, France’s banking sector is by far the healthiest. French banks are, moreover, well aware of the new regulatory environment, of the need to shift towards fee income and cut costs while promoting digital banking.
There is no better example than the biggest and best of them all, BNP Paribas. Among French banks, only BPCE’s wholesale unit Natixis has a higher valuation – with Natixis’ lead largely due to its tilt towards asset management and insurance. BNP Paribas also had the strongest stock-price performance among the French banks during this period, after disappointing results at rival banks, including Natixis.
BNP Paribas’ CEO, Jean-Laurent Bonnafé, manages a bank that combines a dominant home franchise with operations across Europe and beyond, coupling increasingly digitally orientated retail banking with an evolving investment bank that is gaining market share in its home markets, not to mention Euromoney award-winning work in transaction banking and wealth management. The domestic and international success of its online lender Hello bank! is just one example of its leadership in retail.
This was also a year that saw BNP Paribas bounce back financially from a 2014 hit by one-off charges. Building up its domestic deposit base, the bank saw group net income excluding exceptional items rise 7% to €7.3 billion during 2015, and in the first quarter of 2016 the result was even better, up 10% on the same period in 2015. Perhaps most important, the tier-1 ratio rose by 60 basis points in 2015, even after it paid a 45% dividend.
If French banks’ size and expertise in investment banking makes them less popular with some analysts and investors than single-country retail banks, however, it has helped them fight off the advance of the US investment banks in their home market. A bank like Société Générale has a much deeper wholesale banking business in France than US banks will probably ever enjoy, while its international network and experience means it can also make good use of its local network.
Boasting consistent revenue growth over the past two years, SocGen – under co-heads of coverage and investment banking Thierry D’Argent and Sylvie Remond – holds a market share above 10% across all products in its home market, according to Dealogic.
Equity capital markets remain a particular strength; this year it was global coordinator on market-defining deals including the IPOs of Amundi and Europcar – coordinating a wider capital restructuring of the latter – and the IPOs of Spie and Elis. It was also global coordinator on equity-linked transactions for Ingenico and Unibail-Rodamco and sole global coordinator on Airbus’ 2022 convertibles, priced at a negative yield of -0.28%.
Among several multi-billion euro M&A deals, it advised Holcim on its merger with Lafarge, the subsequent corporate finance arrangements and a €2.25 billion liability management exercise. It also advised Nokia on its public exchange offer for Alcatel-Lucent. At the other end of the scale, it worked on mid-cap M&A, advising Eurazeo PME on a €32 million investment in Flash Europe in the transport sector, for example.
In debt capital markets SG was global coordinator on Capgemini’s €2.25 billion triple-tranche senior deal. It also acted on a post-summer, market-opening €1 billion tier-2 10-year bullet for Crédit Mutuel and the City of Paris’ €300 million inaugural climate bond ( matching its own green-bond issuance programme). SocGen has also been a trailblazer in the euro private placement market this year, doing deals for firms including Artemis (in luxury goods) and Korian (retirement services).
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Germany Best bank: Commerzbank Best investment bank: Bank of America Merrill Lynch |
It is never easy competing in Germany’s banking market, fragmented as it is between private banks, public banks and cooperatives. Local savings institutions, the Sparkassen, make life particularly hard for other banks in the retail market.
The achievements at Commerzbank, Germany’s best bank, are therefore all the more impressive – particularly in a year when the challenges faced by its bigger rival, Deutsche Bank, seemed more acute than ever. In 2015, Commerzbank’s net profit more than quadrupled to more than €1 billion. It is the first time since 2007 it had made so much, and that allowed a return to dividend payments. It was a fitting note on which to end for former CEO Martin Blessing.
There is no questioning Commerzbank’s strength in the crucial Mittelstand segment, and Commerzbank refocused on this area under Blessing – making sure the international business was there primarily to service German businesses abroad or foreign firms in Germany and staffing its branches appropriately. If an experienced owner-manager is in Shanghai for a first-time visit to China, the ability to sit down with a Shanghai-based German-speaking relationship manager adds value to the client’s links with the bank.
The progress is perhaps most impressive in the tough retail market, managed by Commerzbank’s private customers division, which was previously under the control of Blessing’s successor, Martin Zielke. The division has acquired more than 1 million new customers over the last four years, while its operating profit in private clients increased to €751 million in 2015, more than three times its 2013 level.
Tier-1 capital is also relatively strong, rising to 12% from 9.3% at the end of 2014. Just as importantly it is ahead of schedule on running down legacy shipping and commercial real estate exposures and its overall non-core portfolio has more than halved. Although in terms of costs, like its rivals, it has some way to go, it is also making progress here, not just with reductions in the workforce but also with new credit-scoring systems, helping the efficiency ratio fall six percentage points in 2015.
Local institutions such as Commerzbank, and above all Deutsche Bank, retain some of their customary presence in German investment banking. But the performance in German investment banking of Bank of America Merrill Lynch shows an international dealmaker investing and operating with increasing success in the country – snatching talent and leading some of the most important transactions.
One sign of renewed impetus at BAML’s Frankfurt operation came in April 2015, when it hired Armin von Falkenhayn, previously head of corporate banking and securities for Germany at Deutsche Bank, as its new country head for Germany. The year that followed appears to have been a good one, and not just because of the string of hires that have followed his appointment.
BAML’s M&A franchise, in particular, stood out. Its advice to Boehringer Ingelheim on an asset swap with French drugmaker Sanofi was a particularly large assignment, at more than €18 billion. It followed a string of other €1 billion-plus M&A deals that closed during the period. These included an upstream energy divestment in Norway by E.On, KKR and Panasonic Healthcare’s acquisition of Bayer Diabetes Care and Hudson Bay Company’s acquisition of the parent of German department store Kaufhof.
The firm’s debt business also notched up some convincing mandates, including a €3 billion multi-tranche offering for Vonovia, a $3.5 billion multi-tranche 144A offering for Daimler and a €1.25 billion dual-tranche hybrid deal for RWE.
In equity capital markets BAML has led all four accelerated bookbuilds in chemicals producer Evonik on behalf of private equity firm CVC. In the same sector it was bookrunner on the €1.5 billion IPO of Covestro in October. Elsewhere, aside from other IPO mandates, it was sole bookrunner on an accelerated placement of secondary shares in property firm Deutsche Annington on behalf of HIP, a subsidiary of the Abu Dhabi Investment Authority.
BAML was also sole bookrunner on a €200 million capital-committed accelerated placement of treasury shares on Deutsche Börse in September – the exchange’s first ECM deal in its own shares since 2005. This transaction is a good example of BAML’s ability to capture clients at the heart of corporate Germany. Indeed, it came shortly before Deutsche Börse’s announcement of a merger with the London Stock Exchange in March this year. BAML is advising the German side on that deal.
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Greece Best bank: Alpha Bank Best investment bank: Citi |
The first quarter of 2015 showed a partial return to profitability in the Greek banking sector, and as Euromoney went to press, the state was close to getting through the first review of its third international sovereign bail-out.
Greece’s best bank, Alpha Bank, bucked the trend and made a small loss in the first quarter, but it was not enough to knock it off its perch as the highest-valued and best Greek bank. Indeed, Alpha’s CEO Demetrios Mantzounis claimed the first-quarter results actually showed that Alpha was back on a path to profitability, as the loss resulted largely from a voluntary separation scheme in Cyprus that is expected to have a future fully phased benefit of €12.9 million a year.
Analysts and investors rate Alpha Bank because of its relatively good ratios in terms of efficiency (50% in 2015), tier-1 capital (15.9% on a fully loaded basis at end-March) and bad-debt coverage (70%). Crucially, it has the market’s lowest level of deferred tax assets at 40% of tier-1, according to research by KBW. Alpha Bank completed its capital raising at the end of last year without support from the state bail-out fund, partly due to a lower capital shortfall in the first place.
The bank is regarded as one of the most proactive when it comes to restructuring its balance sheet, demonstrated this year in a new joint venture with Spanish bad-debt servicing firm Aktua and most recently (on the corporate side) in its agreement with KKR Credit’s European bad-debt platform, Pillarstone. The year also saw Alpha Bank complete the sale of its Bulgarian unit to Eurobank.
Honouring Alpha Bank as Greece’s best bank naturally brings to mind Citi, Greece’s best investment bank. Citi was joint global coordinator on Alpha Bank’s capital increase, raising €1.6 billion and acting as international dealer-manager on the accompanying €1 billion debt-for-equity exchange. It advised Alpha Bank on the sale of its Bulgarian operation and is advising on Alpha Bank’s disposal of Ionian Hotel Enterprises, owner of the Athens Hilton.
Citi’s Greek investment banking claims also extend to the all-important shipping industry, acting as joint bookrunner on a €160 million follow-on offering for GasLog. It was also joint bookrunner on telecom firm OTE’s €350 million new bond issuance in November and acted as dealer-manager on a tender offer for 2016 and 2018 OTE notes.
Its advisory mandates included the privatization of two clusters of 14 Greek airports signed in December with Germany’s Fraport and advising National Bank of Greece on the €400 million sale of the Astir Palace Resort to the Jermyn Street Real Estate Fund, signed in December.
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Iceland Best bank: Islandsbanki Best investment bank: Arion Bank |
As Iceland heads towards the full liberalization of capital controls, the country’s banks continue to rebuild their businesses on new foundations. The talk now is when and how government and creditors might offload their shares in the banks, raising the prospect (albeit remote, for the moment) of foreign banks buying into the sector.
This year, Islandsbanki holds onto its crown as Iceland’s best bank, with an operation well-diversified between wholesale, retail and private banking, and spread across the country’s key economic sectors. It is particularly proud of its performance in customer satisfaction, recording higher net promoter scores among individuals, SMEs and corporates. Islandsbanki has stepped up investment in digital banking too, with mobile app users rising to 50,000. In February, it launched a new mobile payments app.
Islandsbanki was a leader in deposit growth, with assets up 15% year on year. New lending to corporates totalled IKr52.6 billion ($427 million) and new lending in mortgages rose 15%, while non-performing loans dropped from 3.5% to 2.2%. The tier-1 ratio rose from 26.5% to 28.3%. It is a regular bond issuer, including covered bonds and issuance in dollars, Swedish krona and Norwegian krone. It is rated investment grade by Fitch and Standard & Poor’s.
In investment banking, however, the heritage of Arion Bank appears to be serving it well. This year its investment banking division saw operating revenue quintuple. Its bond, equity and foreign exchange brokerage volumes continued to be relatively healthy.
It made repeated use of the local stock exchange to restructure its own business and, at the same time, develop the local capital market. This could be seen in the IPOs of real estate firms Eik, Reitir and telecoms firm Síminn. It also managed bond issuance for Eik and Reitir, and for the municipality of Garðabæ and the national power company, Landsvirkjun.
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Ireland Best bank: Allied Irish Banks |
Despite jitters around a general election, Ireland’s return to economic health continued during the awards period, as unemployment fell, wages rose and urban areas experienced robust demand in their property markets.
It is in that context that after a long period of Bank of Ireland holding the title, this year the award for Ireland’s best bank passes to Allied Irish Banks. Although AIB remains number two by assets and its bad-debt ratio remains slightly higher than Bank of Ireland, the progress CEO Bernard Byrne has made in bringing down non-performing loans is unparalleled – a drop of €9.1 billion in 2015, a fall in the ratio of ten percentage points.
Net credit provision write-backs of €925 million helped put AIB ahead of Bank of Ireland in terms of profit before tax, which rose by 72% to €1.9 billion; analysts expect this lead to continue in 2016. AIB’s pre-provision operating profit also rose more rapidly than that of Bank of Ireland.
AIB’s efficiency drive since the crisis has been intense. It has closed around a third of its branches and cut around half of its branch managers and assistant managers. The result is a cost-to-income ratio that fell below 50% in 2015, slightly better than Bank of Ireland. AIB has also been a leader in terms of new lending; drawdowns rose almost 50% in 2015 to €8.7 billion in 2015.
Meanwhile, a capital reorganization including the redemption and conversion of state preference shares in readiness for its IPO saw AIB issue its debut additional tier-1 bond late in 2015. By the end of the year its fully loaded common equity tier-1 ratio stood at 13%, again comfortably ahead of Bank of Ireland.
Perhaps most importantly, AIB has an edge over its competitors in terms of its digital offering (although this is an increasing area of focus for Bank of Ireland). Today AIB has more than 1 million digital banking users, over half of which are active mobile-banking users, while more than 60% of its personal loan customers apply for their loan online.
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Italy Best bank: Intesa Sanpaolo Best investment bank: Deutsche Bank |
It has been a torrid year in Italian banking. The third-biggest bank searched in vain for a merger partner, consolidation among cooperatives went round in circles, a bad-debt scheme flopped, and big problems at little banks threatened to topple the whole system. Finally, as Euromoney goes to press, the country’s biggest bank is rudderless.
But there is one bank that has largely overcome the challenges that Italian banks face domestically and internationally, Intesa Sanpaolo, which remains Italy’s best bank.
By this time next year, there may be new challengers to this title. UniCredit could change its fortunes under a new CEO. Banco Popolare di Milano (BPM), based in the country’s richest region, has already staged a striking turnaround. BPM is leading consolidation in the banking sector in its efforts to team up with Verona-based Banco Popolare to create a new third-biggest Italian bank.
For the time being, Intesa Sanpaolo is more or less the country’s only big bank that has a strong claim to the award. Despite being smaller by assets, by market capitalization it is roughly twice as big as UniCredit, and more than 10 times bigger than the next biggest bank. Only little Credito Emiliano can equal its price-to-book value.
In 2015 the bank showed particularly strong results; CEO Carlo Messina proposed a €2.5 billion dividend, even after helping prop up the rest of the system through the new Atlas fund. Fully loaded common equity tier-1 hit 13.1%. With a cost-to-income ratio hovering around 50% – the result of a huge reduction in staff and branches – net income reached €2.7 billion, as the bank posted its highest-ever fee income. Asset management and private banking were a particular success, evidence of the wealth that remains in the country.
Intesa Sanpaolo’s advantages, however, are largely because of rather in spite of its Italian business. This is partly because its domestic focus helps it concentrate on tailoring approaches to a tough market, as in its Supply Chain Programme, which helps the bank market products to SME suppliers to other growing businesses. Indeed, for many, the best news will be in the loan book, with medium- and long-term new lending up 54% to €41 billion, while non-performing loan stocks and inflows declined.
In investment banking, the winner is not so clear. Deutsche Bank showed its grip on parts of the continent’s investment-banking business remains tight. In fact, Intesa Sanpaolo is a repeat client for the German lender, which opened the year with a tier-2 deal and inaugural additional tier-1 transaction for the Italian lender.
Other Deutsche Bank bond mandates in Italy included Autostrade per l’Italia, Eni, Fiat Chrysler and Telecom Italia; from the Republic of Italy’s €9 billion 30-year deal down to mid-caps like Davide Campari-Milano.
In equity, Deutsche Bank was global coordinator on the €875 million IPO of telecom tower operator Inwit, which rose 11.5% on its first day, and the €3 billion rights issue for Monte dei Paschi di Siena in June. It was also joint underwriter and mandated lead arranger on Saipem’s €4.7 billion capital raising – including €1.5 billion in revolving credit facilities – and joint bookrunner on its €3.5 billion capital increase, helping the client repay and refinance debt to Eni.
In M&A, its deals included advising Pirelli on the €8.4 billion takeover by ChemChina; Enel on sales in Chile and Slovenia; World Duty Free on the €3.6 billion disposal of the company to Dufry; and advising Hitachi in the acquisition of a 40% stake in Ansaldo STS for €773 million from Finmeccanica in the rail sector.
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Luxembourg Best bank: BGL BNP Paribas |
The eurozone’s biggest bank is also the leader among banks in one of the bloc’s smallest countries, Luxembourg. BGL BNP Paribas saw net profit rise 5% in 2015 to €358 million, way above the other contenders for this award. Net banking income rose to €1.4 billion. In its retail and corporate banking division, the firm reported growth in loans and especially deposits, partly thanks to the development of its international cash management business.
Despite construction of a new headquarters, costs stayed under control thanks to a new efficiency programme offsetting contributions to the Single Resolution Fund and the Luxembourg Deposit Guarantee Fund. The solvency ratio rose to an exceptionally high 22.4%.
The international leasing division posted further revenue growth, concluding 300,000 financing contracts in 2015. The private banking division’s five locations in Luxembourg also reported growth among resident clients, along with the continued roll-out of new products.
On the digital side, it launched an app for the new Apple Watch and launched BGL BNP Paribas Digicash, teaming up with supermarket chain Auchan to launch in-store smartphone payments. In corporate banking, feeding into the rest of the group, it helped the financing of the Royal Hamilius property development and local wind energy projects.
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The Netherlands Best bank: ABN Amro Best investment bank: ABN Amro |
Dutch banks are relatively healthy by eurozone standards, partly due to a rebound in the housing sector. Still, they have their challenges, not least dealing with regulatory reforms that are likely to force them to ascribe much higher risk charges to their mortgage books.
Rabobank, which has the biggest mortgage portfolio, is reducing its balance sheet by €150 billion by 2020 as a result. It and others must now find insurance and pension-fund investors to take these assets, while insurers increase their own share of origination and broker-focused mortgage start-ups also bring new competition to the top-three banks.
ING, last year’s award winner, may have cracked European digital banking but this is most evident in Germany and Spain (two thirds of ING’s business lies outside of the Netherlands).
By contrast, the best bank this year, ABN Amro, gains 80% of revenue from the Netherlands and reported an exceptional financial performance during the period. Its net profit rose by 24% in 2015 to almost €2 billion; return on equity rose to 12% (compared with 10.8% at ING). Tier-1 capital rose to 15.5%, also higher than its peers. It has also emerged as the country’s biggest originator of new mortgages.
ING beats the cost-to-income ratio at ABN Amro at group level, to which ABN Amro’s response is that private banking is necessarily a higher-cost business, but nevertheless an attractive one in terms of fees. ABN Amro is top of Euromoney’s 2016 private banking survey in the Netherlands and one of the leading wealth managers in the eurozone.
It would be wrong to criticize ABN Amro on efficiency. Since 2010, it has reduced full-time employees by about 4,000, cut retail branches by half and its cost-to-income ratio has fallen by around 10 percentage points. It is also developing digital banking, even if this is not as all-encompassing as it is at ING. Its investments in US blockchain technology developer Digital Asset Holdings is an example of its commitment.
Meanwhile, ABN Amro’s reputation as the investment bank for Dutch clients remains strong, despite resisting the temptation to revive its pre-crisis brand outside its home market. It also has a team of highly experienced investment bankers, having brought 62 M&A and capital markets specialists back from RBS’ Dutch wholesale banking group in 2012.
In 2015, the reincarnated ABN Amro investment banking division – which it calls international clients, led by Rutger van Nouhuijs – breached the €1 billion revenue mark, while managing to cut costs, resulting in a strong increase in net profit to €292 million and a return on allocated equity of 11%.
It is an operation that includes M&A, equity and debt capital markets, loans, capital structuring and advisory, trade services, cash and liquidity management.
In capital markets, it was global coordinator or joint bookrunner on 10 Dutch deals in 2015, including the accelerated bookbuilds for Eurocommercial Properties, NN Group and Refresco Gerber and the IPOs of Flow Traders and legal and corporate services firm Intertrust.
It was bookrunner on numerous bonds, often complex ones such as Aegon’s conditional pass-through covered bond.
In M&A its standout deals included advising on Volkswagen’s €3.7 billion sale of LeasePlan to a consortium of buyers, helping the seller manage the liquidity around the sale and complications relating to LeasePlan’s regulatory status as a bank. It also advised Swedish firm Sweco on its acquisition of Dutch engineering consultancy Grontmij through a €354 million public offer and coordinated Sweco’s rights issue to finance the transaction.
Finally, the success of its own deals were in part thanks to its capacity as an investment bank; a €1 billion additional tier-1 deal and its €3.8 billion IPO, the definitive moment of the year in Dutch capital markets.
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Norway Best bank: DNB Best investment bank: Citi |
Norway’s economy is suffering from the impact of lower energy prices, but its biggest bank seems to coping well in the new era. Despite the challenges, DNB managed to post higher return on equity in 2015, with ROE rising to 14.5% from 13.8% in 2014 and the common equity tier-1 ratio also rose from 12.7% to 14.4%. Pre-tax operating profit fell in the large corporates and international customers division, but continued to rise in the retail and SME segment. Non-performing loans also fell, from 0.96% to 0.76%. Efficiency was another bright spot, falling still further to 36.9% from 41.9%.
The year at DNB featured more investment in technology, including migration from seven to one data-processing centre and the launch of a new advisory service for startups. One million Norwegians had downloaded its new P2P payments app in its first six months, an initiative that sits alongside wider growth of its mobile banking offer, including new fingerprint identification.
In investment banking, meanwhile, the Norwegian franchise at Citi is another example of its exceptional range across the Nordic region, which includes on-the-ground presence in Oslo. One illustration of the strength of this business is its success in securing the global custodian mandate from Norges Bank Investment Management (NBIM), which manages the world’s largest sovereign wealth fund.
This year Citi acted as sole bookrunner for NBIM in a €116 million accelerated equity offering in Telenet. But its Norwegian business spread much wider, including advising Chinese consortium members Qihoo and Kunlun in the NKr10.5 billion ($1.26 billion) public tender offer for Opera Software. It was also exclusive financial adviser to Permira in its NKr4.3 billion divestment of Pharmaq.
In the debt markets Citi acted as bookrunner on a €750 million seven-year senior bond for DNB; it was structuring adviser and bookrunner on the €600 million 30-year subordinated offering by KLP in June and managed a $1 billion benchmark for KBN.
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Portugal Best bank: Santander Totta Best investment bank: CaixaBI |
It was another eventful year in Portuguese banking. The headlines were dominated by the continued fallout from the 2014 collapse of the Espírito Santo group and a potential takeover of BPI by Spain’s CaixaBank.
There is no change in the winner of Euromoney’s award for best bank in Portugal: it remains Santander Totta. Yet it was an eventful year for this bank, too, not least due to its 2015 €150 million acquisition of the healthy part of Banco Banif, following a Bank of Portugal resolution process that split the Madeira-based lender into good and bad banks.
The deal puts Santander in second place in terms of loans and deposits after BCP among the private Portuguese banks, increasing its market share from 12% to 15% and adding around 350,000 clients.
Not including the contribution of Banif, Santander Totta’s underlying net income grew by around 50% in 2015 to reach €291 million, following a strong increase in 2014 – an extraordinary set of results for a Portuguese bank. In 2015 its revenues rose 14.9% and costs fell 4.2%. It also posted a 7.3% increase in deposits and growth of 6.8% in loans to companies, further bolstering market share.
Santander Totta’s other figures were also encouraging. There was a fall in the non-performing loan ratio to 4.09% and an increase in bad-debt coverage to 168%; a drop in the cost-to-income ratio to 42% and an increase in underlying return on equity to 9.2%. Tier-1 capital also stood well above regulatory requirements, at 13.9% at the end of 2015.
The Portuguese operation has been a leader in Santander’s global SME strategy, including the Santander Advance programme. In digital, the bank launched a new app. In investment banking, it was active in M&A, bonds and structured credit. Santander advised First State Investments (part of Commonwealth Bank of Australia) on its €900 million acquisition of the country’s third-largest wind energy producer from Enel, including arranging the financing and risk management for the transaction.
It was a year of change, too, in Portugal’s investment banking sector, with the acquisition of Banco Espírito Santo de Investimento (BESI) from Novo Banco completed in September. BESI becomes part of Hong Kong and Shanghai-listed Haitong Securities. It could be one to look out for, as the Chinese firm adds BESI’s former operations in Portugal and internationally to its own franchise. This year, however, CaixaBI retains its title as Portugal’s best investment bank.
In debt capital markets CaixaBI was way ahead of its competitors in the league tables for the period, both by volume and number of deals. Prominent among the deals in which it acted as bookrunner was a €4 billion 10-year issue for the Portuguese state. It was instrumental in bringing inaugural issuers to market, such as telecoms firm NOS and chemicals company Hovione, where it acted as sole bookrunner. It also acted as lead manager on five private placements and arranger in the establishment of 24 new commercial-paper programmes for a total of more than €500 million.
In equity capital markets, CaixaBI advised and acted as bookrunner on a €70 million accelerated bookbuild for REN, which saw Novo Banco sell a 5% stake in the firm; it was global coordinator on an €81.6 million rights issue for municipal waste firm Mota-Engil in the context of the delisting of the firm’s Africa subsidiary from Euronext Amsterdam.
Finally, in M&A, CaixaBI advised Ardian on the acquisition of five motorway concessions from Ascendi, Efacec on the sale of handling and power solutions units and José de Mello on the sale of a €770 million 30% stake in motorway concessions held by Brisa.
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Spain Best bank: BBVA Best investment bank: Citi |
Of all the European country awards, Spain is perhaps the most hotly contested, with all three of the big banks presenting a compelling case for winning, as do a number of smaller banks.
Santander, the biggest Spanish-based bank, increased profit in Spain in 2015. Bankia, a crisis-era amalgamation of seven regional savings banks, is one of Europe’s most impressive transformation stories; its profit rose rapidly, helped by good efficiency, while asset quality and capital metrics also improved. Internet-focused Bankinter continued to wow investors, acquiring Barclays’ Portuguese retail business and grabbing more market share (albeit from a low base).
Last year’s winner, CaixaBank, completed the integration of Barclays Spain, made progress in improving its capital structure by selling down minority stakes in foreign financial institutions and launched a new digital business, imaginBank. CaixaBank’s financial performance, however, while catching up, is a step behind the diverse and evolving Spanish business at BBVA, Spain’s best bank, which saw net income rise to more than €1 billion in 2015, up 22% on the previous year.
BBVA brought down its loan-to-deposit ratio closer to 100% during the period and saw steep increases in market share in both loans and deposits, partly due to the consolidation of Catalunya Banc. Following its 2012 purchase of Unnim Banc, BBVA has increased its market share to more than 20% in Catalonia, adding 2 million new customers and becoming the region’s number two bank, behind CaixaBank.
BBVA’s cost-to-income ratio is also lower than its rivals’, reflecting its growing strengths in digital banking. BBVA could reduce its branch network by 9%, according to research from KBW, but that compares with 17% at CaixaBank and 24% at Santander. BBVA’s Spanish mobile customers have tripled since 2012 to more than 2 million and the proportion of loans originated online is also rising. Its mobile wallet has had over 1 million Spanish downloads and it is also expanding its Nimble Payments platform.
BBVA is also a leader in areas such as cash management and trade and supply-chain finance – linking into operations in 32 countries and with more than 700 trade finance specialists. In project finance it was bookrunner on a rare Spanish public-private partnership project bond, among other deals. BBVA also occupied a prominent role in the debt capital markets and syndicated lending in Spain, boosting its private placement activity and leading M&A financings for clients including Grupo Antolin and Sigla.
Madrid has become an important destination for international firms in Europe and it is right to recognize one of these, Citi, as the best investment bank in Spain. Citi’s former head of Iberia, Manuel Falco, now heads its banking business for Europe as a whole and Falco’s team is clearly achieving success.
Citi was particularly strong in advisory, with deals including Euskaltel’s acquisition of R Cable, Morgan Stanley Infrastructure’s sale of Madrileña Red de Gas, various transactions for infrastructure firm Abertis (including the sale of its airports division), and the acquisition of Pepe Jeans by Lebanese and Asian buyers.
Citi was sole bookrunner on an accelerated bookbuild for supermarket chain Dia. It was joint bookrunner in Cellnex’s €2.1 billion IPO and led bonds for government, corporates and an array of financial institutions. It was active in leveraged financings for biomass firm Ence and Euskaltel, also acting as global coordinator on the latter’s IPO in June.
Added to all that, Citi can further boast strength in the markets side in Spain, particularly in foreign exchange.
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Sweden Best bank: Nordea Best investment bank: Carnegie |
Swedish banks remained the darlings of European investors this year as they continued to reap the benefits of an attractive market and earlier reorganization that have put them on a much higher level of profitability than lenders elsewhere in the region.
The recent furore around the exit of Swedbank CEO Michael Wolf suggests life in the Swedish banking sector is not as idyllic as it might sometimes seem. But by market capitalization, the top three Swedish banks are now all among the top 20 European lenders, and the fourth biggest, SEB, is not far off that list. Nordea, for example, has extraordinarily high profitability and capital compared to other European banks, particularly of its size.
This year return on equity at Nordea – led since late last year by group CEO Casper von Koskull – rose to 12.3% from 11.5% in 2014 and its tier-1 equity ratio rose to 16.4%. While it may not have quite as high tier-1 and ROE ratios as smaller Swedish banks, it is managing some much more difficult markets (notably Finland) and is much bigger than rivals. Nordea’s net profit at group level stood at €3.7 billion in 2015, up 10% on 2014, and more than twice that of Handlesbanken.
Nordea has a greater geographic and product diversity than its rivals. It gains a higher proportion of revenues from fees than any top-three Swedish bank, according to KBW research. In wholesale banking it can boast particular strengths in its bond and acquisition financing franchise in Sweden. It is top of the Nordic region in Euromoney’s 2016 private banking survey and rose to second place in Sweden.
Its cash management operation carries out almost 2 billion transactions a year, and during this awards period its transaction banking offering saw the launch of a new retail division, in addition to new initiatives and investments for corporates, trade finance, payments and blockchain.
Perhaps most important is the bank’s direction. In 2015, Nordea’s cost-to-income ratio fell 200bp to 47.1%. This looks set to improve further as it invests in digital banking with initiatives such as touch identification for mobiles. It is decreasing head-office locations and moving them out of central business districts. Last but not least, it is merging its Scandinavian banks, which will become branches of the Swedish operation.
Meanwhile, in investment banking, a booming IPO market played into the hands of Carnegie. The local firm can claim to have been instrumental in the market’s success, helping secure harder commitments by cornerstone investors. It was bookrunner on 13 Swedish IPOs during the period and co-lead manager on one.
In 2015, Carnegie was bookrunner on successful IPOs ranging in size from SKr4.8 billion ($576 million) for healthcare firm Attendo, to SKr514 million for technology firm Tobii. In the first quarter of 2016 alone it was sole lead on the IPOs of Garo and Catena Media and bookrunner on the IPOs of Humana and LeoVegas; all four rose strongly in the secondary market.
In M&A Carnegie was sole adviser to Polais Private Equity on the sale of online building materials retailer Skanska Byggvaror to Byggmax, to iGame on its acquisition of Unibet and to Viltor’s cash offer for IT consultancy Cybercom. In the debt markets it was also joint bookrunner in Moberg Pharma’s SKr300 million senior unsecured bond and sole bookrunner in TF Bank’s SKr100 million tier-2 bond issue.
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Switzerland Best bank: UBS Best investment bank: Credit Suisse |
Perhaps the easiest choice in this year’s western European awards is UBS, which continued to stride ahead of its biggest rival during the period under review. UBS now has a market capitalization more than twice the size of the next biggest Swiss bank, and the valuation gap with its main rival only widened over the year of the awards.
Looking specifically at the business in Switzerland itself, UBS’s profit before tax rose by 14% to SFr3.2 billion ($3.3 billion) in 2015. Despite the increasing challenges of record low rates, market volatility and risk aversion among clients, UBS’s Swiss universal bank had its best year for half a decade.
That division’s cost-to-income ratio fell three percentage points and reached 55%, thanks to 3% growth in operating income and a new record in cross-divisional referrals, coupled with a 3% drop in operating costs. Digital products helped, not least in personal banking.
Switzerland’s contribution to UBS group profit before tax has risen to almost 40%, running a return on attributed equity of 55%, up seven percentage points. As such it is the group’s biggest contributor (through retained earnings) to a fully loaded tier-1 capital ratio of 14.5% – extraordinarily high for a big and globally diversified bank.
Meanwhile, UBS came top of Euromoney’s private banking survey, not just in Switzerland but globally. It was the only Swiss bank, moreover, in the top 10 banks in western Europe in Euromoney’s cash management survey and counts as clients 85% of the top 1,000 Swiss corporations and 80% of Swiss-domiciled banks. Its custody business attracted a record volume of SFr15 billion in assets.
In investment banking, however, it is a different story. Here Credit Suisse holds onto its title as Switzerland’s best investment bank despite strong competition, not just from UBS but also banks such as Goldman Sachs, as it continues to tap into the deep client relationships in its home country.
Credit Suisse’s deals in the equity capital markets included many of the key deals of the period; the $594 million accelerated bookbuild in Partners Group on behalf of Morgan Stanley, in which it was sole bookrunner; the $189 million IPO of Cassiopea, in which it was joint global coordinator; the $2.4 billion rights issue for Dufry related to its acquisition of World Duty Free and an accelerated bookbuild in Cembra Money Bank that saw GE Capital sell its remaining stake.
In debt capital markets, it brought a number of international names to the Swiss franc market, including a debut for Coca Cola for the first time, Pemex and Shell after a nine-year absence. In M&A, deals for Nestlé included a sale of its Davigel subsidiary and the acquisition of a majority stake in a joint venture with Guthy-Renker, while Credit Suisse’s work with Partners Group continued with an acquisition of Knowledge Universe’s US early-childhood education business.
In more recently announced deals, the firm is advising Chemchina on its acquisition of Syngenta, Laureate Education on its sale of Glion and Les Roches to Eurazeo, and it also acted on EQT’s tender offer for Kuoni, valuing the group at SFr1.5 billion.
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UK Best bank: Lloyds Banking Group Best investment bank: Barclays |
Despite a healthy economic rebound in recent years, at least pre-Brexit, the UK has hardly been kind to its banks. Consumer redress claims on payment protection insurance (PPI) have crippled sector profitability. New ring-fencing rules present just one of the next challenges.
Yet it is a vibrant sector, with new or revived banks nipping at the heels of bigger lenders, while London’s start-up scene is prompting old lenders to adapt to the digital world. Santander is a particularly serious challenger to the big four banks. Its 123 account has brought in around 4 million new clients since 2013 and it is still adding 100,000 accounts a month, despite introducing higher fees. The UK now constitutes the Spanish group’s biggest unit by profit.
Nevertheless, Lloyds Banking Group remains the UK’s best bank, making more than four times more money on an underlying profit before tax basis in 2015 than Santander UK. Lloyds’ lead on the other big four banks is further evident in the stock market, with Lloyds the only one trading above book value during the awards period.
Compared with the rest of the sector, Lloyds is more efficient (its cost-to-income ratio fell further below 50% in 2015), and more profitable (underlying return on equity breached 14% in 2015). Its shares rose by more than 10% on its 2015 results, which came with news of a special dividend, despite a large conduct charge (the last for PPI, it is hoped) – another thumbs-up for CEO António Horta-Osório.
Lloyds is also better capitalized than its peers. The tier-1 ratio rose to 13% in 2015, compared with a fall to 11.6% at Santander, for example. And in contrast to RBS’s attempts to carve out Williams & Glyn, Lloyds completed its equivalent carve-out of TSB in the period and it returned a further £8 billion ($11.6 billion) to the government, reducing the state’s stake to 9%.
But it is Lloyds’ qualitative claims that shine brightest. In digital banking it launched more than 150 new services and propositions and plans to invest £1 billion by 2017. It is equally strong in the SME sector, helping to develop a new national manufacturing training centre. It has been innovative in corporate social responsibility, as shown by an inaugural environmental, social and governance bond, which raised £250 million in March.
Meanwhile, Barclays’ strong progress in investment banking across Europe is especially evident in the UK, where it takes the award for best investment bank. Although even in the UK, Barclays appears careful not to over extend itself, it is working its way up the UK league tables, with top 10 positions in M&A and equity, and strong second places in bonds and loans.
In equity, Barclays is particularly proud of its success in winning corporate broking mandates, which it now puts at 50, including 20 of the FTSE100. One such client is Equiniti, which brought in Barclays as global coordinator for its £322 million IPO shortly after its private equity owner (Advent) sold out of World Pay in a £2.5 billion IPO, in which Barclays was the only UK bookrunner.
Corporate broking work was also instrumental to Barclays’ involvement in Just Retirement’s all-share merger with Partnership Assurance, with Barclays leading the £101 million placing and open offer. It was also involved in IPOs including Ibstock, Hastings and Gym Group, in which it acted as global coordinator.
In debt capital markets, it solidified its natural strengths in sterling, notching up 13 deals for the European Investment Bank, as well as a string of debut issuers during the period. It was also active in the sterling high-yield market for names like Iron Mountain and Virgin Media, as well as financial institution deals drawing on the bank’s own experience as an issuer, such as Santander UK’s inaugural holding company senior and additional tier-1 bonds.
