Canada
Best bank Royal Bank of Canada
Royal Bank of Canada stands out as the top bank in virtually every sector it is involved in in Canada and is again the top dealer of the Canadian dollar. Helped by the strength of the Canadian economy it has also registered a very strong financial performance: its return on equity last year of 19% was the best in Canada.
To its traditional strengths of mortgages and business loans it is now adding a successful virtual-banking capability. Its telephone banking service, launched in December 1995, has so far attracted 1.1 million customers, and the PC and Internet banking services introduced at the end of 1996 are growing in popularity. The aim is not just to keep ahead of the competition, but also to be a market leader in products that will contribute greatly to reducing costs.
After the recession the bank’s asset quality definitely lagged behind its competitors, but its capital ratios and low proportion of bad debts are now regarded as one of its main strengths.
Analysts consider RBC to be focused on achieving shareholder value: there have been four dividend increases since late 1995, and a share buy-back programme was started late last year. But the bank is also expanding, having bought retail brokerage Richardson Greenshield, Westbury Canadian insurance company and Toronto Dominion’s custody business last year.
Best securities firm Scotia Capital Markets
Last year was the first in which trading house ScotiaMcLeod and the global business network of Scotiabank worked as one unit. The result, Scotia Capital Markets, went on to earn record profits and was involved in high-profile and innovative deals. In August last year it acted as joint lead-manager on the Canadian government’s US$1 billion global bond, and has acted as sole lead-manager on Canadian dollar deals for issuers such as Rabobank, Rogers Communications and the Inter-American Development Bank.
Scotia Capital Markets also has a large presence in Canadian mergers and acquisitions. In one deal it acted as advisers to Onex in its acquisition of IBM’s contract electronics manufacturer, Celestica, for C$560 million (US$405.7 million). The financing was raised from a combination of loans, credit facilities and subordinated debt.
The firm is the leading underwriter of income units high-yielding instruments whose income is linked to the performance of the underlying asset, usually coal fields, gas wells and the like. Scotia Capital Markets produces some of the most comprehensive research on these units and is also the leader in secondary trading.
Best foreign bank HongkongBank of Canada
HongkongBank of Canada is the seventh-largest bank in Canada, and the largest of the foreign banks, with over 100 branches worldwide, and has been in operation since 1981. This means it has developed a substantial retail base and a stable, inexpensive source of funding. Its activities include broking, discount broking, trust activities and mutual funds. It is now entering the second year of offering automobile and casualty insurance services in direct competition with the federal insurance business.
Hongkong Bank is also beginning to increase its activity in cross-border transactions. At the end of 1996 it bought businesses in Portland, Oregon, and Seattle, Washington, to cover the west coast, as well as entering into a strategic alliance with Wells Fargo to set up a trade-finance arm. HSBC Group member Marine Midland is the link-up for the east coast.
Best foreign securities firm Goldman Sachs
Goldman Sachs is still one of the main lead-managers for yankee bonds issued by Canadian borrowers, but as that market has dipped over the past 12 months its depth of business has increased. Its role in privatizations has become more important for example, the selling off of Canada’s air-traffic control system. It has also been a pioneer in the high-yield debt sector, being the bookrunner for property developer TrizecHahn on its C$300 million (US$217 million) issue, and Hammerson, names which, being BBB rated, were previously shunned as debt issuers. Making other inroads into the domestic market, Goldman Sachs has also just been mandated to manage the securitization of Canada Trust’s mortgage portfolio the only foreign bank in the seven-bank syndicate.
United States
Best domestic bank Chase
Chase is the largest bank holding company in the US, with 700 branches across the country. Its main strength is its ability to deliver integrated treasury and payment services, and it offers a full range of financial services it has recently been ranked as the third-largest originator and servicer of residential mortgage loans to more than 1.6 million customers.
Chase is the leading provider of global custody services to US mutual funds, insurance companies and unit trusts, and is the largest clearer of US government securities. It retains its position as the leading foreign exchange house in New York. There has also been a drive to increase spending on technology since the merger last year and the bank is planning to spend $1.8 billion on technology in 1997 estimated to be 10% of that spent by the entire US banking industry.
Best securities firm Merrill Lynch
Merrill Lynch continues to dominate US investment banking circles. It offers services in all major products, and its market share in all of them is commanding, varying from 15% to 22%. Some of the major deals include being lead manager for US West’s $4.1 billion debt offering, the largest ever investment-grade corporate offering, and lead manager for the largest equity offering for a thrift Washington Mutual’s $693 million share offer.
And in 1996 Merrill also managed to improved its position in mergers and acquisitions: in 1995 it ranked eighth, but rose to second in figures compiled by Securities Data. Figures for the first quarter of 1997 put the value of business undertaken by Merrill at nearly $250 billion. The firm even did well in foreign exchange, a business not previously associated with it, ranking third in New York in Euromoney‘s annual foreign exchange survey.
Best foreign bank ABN Amro
ABN Amro is the largest foreign bank in the US, with 15 offices, 16,000 employees and assets of $97 billion, and has been on an expansion drive of late. In the past 12 months it has bought four domestic banks and added them to their operations. These were Standard Federal the largest thrift in the midwest Chicago Corporation, Comerica Bank-Illinois, and Columbia National Bank.
This is in marked contrast to other European banks, which have been sounding the retreat from US commercial banking in recent years. With a strong presence in the midwest, and the backing of the board in Amsterdam and its deep pockets ABN Amro North America now regards itself more as a domestic bank. And analysts assert that the Dutch may want to get as much as a third of their earnings from its US operations; in May this year the bank listed ordinary shares on the New York Stock Exchange in the form of American depositary receipts
Best foreign securities firm UBS
UBS has maintained an active presence in the US for over 50 years and over the last two has made significant efforts to increase its share of the securities market, as witnessed by its high-profile recruitment drive. It is now the leading non-US underwriter of public debt securities in America, acting as lead-manager on deals for companies such as IBM and PepsiCo, and is the top underwriter of US debt for bank holding companies (excluding self-managed issues). UBS has also been an active player in mergers and acquisitions, advising Aegon on its $3.5 billion acquisition of Providan, the largest acquisition ever in the US life insurance industry. The bank is also emerging as one of the leading contenders in financing life sciences, lead-managing the largest IPO in 1996, CardioThoraic Systems’ $92 million offering. It is also a frontrunner in US technology financing, helping to raise over $3.3 billion in equity capital since 1995.
