Poll of polls: Overall results
Poll of polls: Underwriting results
Poll of polls: Trading results
Poll of polls: Advising results
It was a traumatic year for UBS, culminating in the departure of its chief executive and three senior managers. But in investment banking the sum of the two big Swiss banks, puts Warburg Dillon Read (WDR), the investment banking arm of UBS, top of its peer group, on aggregate.
Diversity is the key. “We always were the consistent number two,” says Manfred Schepers, global head of debt capital markets at WDR. He accepts that in the Deutschmark and Ecu, or sterling fixed-income trading markets, where respectively Deutsche, Paribas and Barclays may be number one, “but in aggregate our franchises are much broader, and can provide a more diverse product base”.
With the advent of the euro WDR has “critical mass” and expects to be a “decisive player” in euros as it already is in dollars, Swiss francs and sterling, says Schepers. The big challenge: “Is our dollar presence, in addition to our position in euros, sterling and Swiss francs, going to give us a leading edge over the US bulge bracket firms globally?” He anticipates the US houses won’t have comparable distribution in euro securities. “You need distribution in equity, equity-linked and fixed income, otherwise you won’t maximize the potential of client relationships,” he says.
WDR was helped in 1998 by the addition of some UBS franchises to those already enjoyed by SBC Warburg. The best, although still marginal, was in the US primary and secondary markets, where Warburg had failed. UBS, for example, brought WDR a $4.8 billion yankee issue for Associates Corp. of North America in October last year.
WDR’s primary and secondary Eurobond business was relatively unaffected by the Russian crisis in August. “During the second half of the year we were able to focus a lot more on new business, ahead of our competitors,” says Schepers. That was despite the knock to its reputation caused by the revelation of a Swfr950 million hole cause by exposure to Long-Term Capital Management – a legacy blamed conveniently on “old UBS”.
In the primary Eurobond market, WDR is particularly proud of its €4 billion issue for Italy, brought in February at a narrow spread of 16 basis points over OATs. Says Schepers: “That deal gave the European market confidence that Emu was going to happen.”
WDR did it again in October with a Dm2 billion issue for Dutch telco KPN, convincing itself and the market that the global crisis was a series of localized problems. “It gave us a flavour of what the capital markets would be like after Emu, and showed that in core Europe the investor liquidity for familiar credits was greater than ever,” says Schepers.
There is also some pride at WDR in its securitization of Paris Club debt on behalf of the Italian export credit agency SACE. The $515 million defeasance of developing countries’ official export credits was a market first.
In equities, WDR has been able to build on the franchise of SG Warburg, Rowe & Pitman, Philips & Drew, to provide the broadest research and distribution network in Europe. “In Europe we’re streets ahead of the US firms,” says a WDR source. “We have enormous secondary market turnover, and it’s very profitable.” The challenge is to establish the same kind of operation in the US.
WDR sees an advantage in Europe in the disarray of its major European competitors – Deutsche Bank (digesting Bankers Trust) and Credit Suisse First Boston (recovering from its Russian shock and other management issues), although these are both formidable opponents. This is the year in which we are likely to be surprised at which firms have got Emu right – but WDR may be one of them.
Poll of polls: Overall results
Poll of polls: Underwriting results
Poll of polls: Trading results
