Greece
Best domestic bank: National Bank of Greece
Best foreign bank: Citibank
Best domestic securities house: National Bank of Greece
Best foreign securities house: CSFB
Best foreign bond house: UBS Warburg
The country’s largest bank, National Bank of Greece, has traditionally been hampered by state ownership. However n the past three years though NBG has steadily shed its sleepy, politicized image. It has consolidated its sprawling 173-company group and invested heavily in new technology. It has been further privatized via a e208.7 million (US$227.1 million) secondary offering in October 1999.
And it has reduced its investments in non-core holdings.
The results? Pre-tax profits almost doubled from 1998 to 1999 (year end December 31).
Reported return on equity was 39.1%. Tier I capital rose from 8.8% in 1998 to 14.4% in 1999. And the bank’s net interest margin is forecast at around 3.2%.
Citibank, with a 35 branch network (to be expanded to between 80 and 100 in the next four years) is viewed domestically as a prestigious local retailing operation. This franchise has 15.4% of the credit card market and a 9% share of consumer loans (the market leader has 25%) making it the most successful foreign bank in this sector. The tie-up with Salomon Smith Barney also allows the bank to create and distribute new products.
In corporate banking, Citi concentrates on the top 40 or so Greek corporate groupings and their needs for foreign funding and sophisticated financing techniques. Despite this focus the bank is still fifth largest corporate bank by assets and tops the table for arranging syndicated loans for Greek borrowers. It is also the leading foreign custodian in the country and, according to Bank of Greece figures, one of the most active players in the foreign exchange, government debt and money markets. It is a primary dealer.
There is no domestic Greek drachma bond market and Greek borrowers are rare in the international markets. All the main domestic and foreign houses tend to get a role in those deals that do appear. This year’s tables are skewed by the successful e2.5 billion issues for the Republic that was jointly arranged by Deustche, CSFB, Morgan Stanley and National Bank of Greece. However, the National Bank was also a senior member of syndicates on deals for ABG Finance, the Alpha Credit Group itself, EFG Hellas and the Public Power Corp.
The equity market has been more active with Alpha Securities and National Bank at the centre. In a fragmented market with many small (and not always reputable) brokers, these two firms are regarded by custodians such as Citibank as the most reliable.
Internationally, the picture is more clear cut. Again, NBG comes top of the tables, largely on the back of the continuing sale of OTE.
The battle of the foreigners is closely fought. In equities CSFB was responsible for 88% of Tier I allocations in Europe on OTE IV.
It was also global co-ordinator and sole bookrunner of the combined offering of 17% of Panafon, Greece’s leading cellular operator.
It acted as sole lead manager and bookrunner on the $101 million international secondary offering of Alpha Bank. It was joint books on the Republic’s e2.5 billion offering in February of this year. In terms of volume traded in the domestic bond market it is by far the largest non-Greece domiciled bank with average monthly trading volume of $1 billion.
It also edges ahead in the bookrunner tables for international bond issues for Greek clients.
In corporate finance CSFB advised Alpha Bank in its acquisitions of Ionian Bank, to Hellenic Bottling on its $6.9 billion merger with Coca Cola Beverages; and has been appointed as an advisor to the Greek government and OTE to review strategic alternatives for the company. In mid-June it was also called in by Olympic Airways to advise on the sale of a minority share in the airline.
Simon Brady
Switzerland
Best domestic bank: Credit Suisse
Best foreign bank: Deutsche bank
Best domestic bond house: CSFB
Best foreign bond house: Deutsche Bank
Best domestic equity house: CSFB
Best foreign equity house: Deutsche Bank
Best domestic M&A house: UBS Warburg
Credit Suisse and its investment banking arm Credit Suisse First Boston collect three of the four domestic awards this year despite the merger of the investment banking divisions of rivals UBS and SBC into the newly rebadged UBS Warburg.
In commercial banking.the banks are neck and neck. UBS is bigger. It has the highest market share in retail banking in Switzerland and has Sfr1.75 billion in assets under management. It gets the corporations’ vote in Greenwich surveys and around 180,000 small and medium-sized companies bank with it.
To illustrate how closely the banks are matched take 1999 operating income: UBS Sfr28.6 billion up 28%; Credit Suisse Sfr27.9 billion, an increase of 28% on the previous year. Both have poor cost income ratios – UBS is marginally better and both recorded large increases in net profits, UBS up 108% and CS up 70%.
However, last year Credit Suisse was the more dynamic. Assets under management were up 26% versus UBS’s 8% growth. The core domestic Credit Suisse unit more than doubled its net profit to Sfr451 million. In Switzerland: the number of online banking customers more than doubled to over 212,000 by the end of the first quarter of 2000. Youtrade, which became the first direct brokerage service in Switzerland when it was launched in April 1999, had around 16,000 customers by end-March 2000. Around 47% of all securities transactions at Credit Suisse are executed online.
The Swiss franc debt markets are a two horse race and volumes are dominated by foreign issuers looking for cheap funds. The key to winning mandates is the ability to spot portfolio shifts quickly and bring issuers to market to satisfy investors’ new appetites.
CSFB, with short-dated deals for Bayerische Landesbank, OKB and the Republic of Italy, picked up investors’ duration sensitivities, and gained 41% of aggregate market issuance over the last 12 months.
CSFB has also been at the forefront of introducing new products into a traditionally conservative market. Its Sfr1 billion asset-backed issue for GMAC was one of 1999’s landmark deals. The bank has led the so-called Alpine market (foreign-currency domestic bonds) with the first euro and dollar-denominated transactions.
In equities CSFB is the leading underwriter of Swiss initial public offerings and has around 30% of combined IPO and secondar y offerings volumes. In the past 12 months it also launched 336 securitized equity-linked derivative products.
Like Credit Suisse, Deutsche Bank collects three awards. Although rival Citibank is very strong in loan-based and cross-border capital raising, and wins plaudits from Swiss clients for these services, Deutsche is more rounded in capital markets and is stronger in the domestic Swiss franc bond markets. It is the leading foreign house in the league tables – Salomon Smith Barney ran the books on just one deal in the time period relevant to the awards. In equities the bank is ranked in the top three in an influential Reuters poll – though it is dwarfed by its large Swiss rivals.
UBS and Credit Suisse dominate the M&A markets. Credit Suisse is number two with market share of around 28%. UBS is a nose ahead.
Simon Brady
Turkey
Best domestic bank: Garanti Bank
Best foreign bank: Chase
Best domestic securities house: Global Securities
Highly commended: Garanti Securities
Best corporate finance house: Garanti Securities
Garanti Bank, one of the four leading banks in Turkey, is well-placed to benefit from promised improvements in the Turkish economy.
As inflation falls to a predicted 30% towards the end of the year banks can no longer rely on the government bond market to boost their returns. Garanti anticipated that with a strong corporate lending franchise and is now making big efforts to gain share in the consumer market. It has a head start in internet banking (a market share of over 50%) and first-mover advantage in telephone banking. It has a 30% of the international payment card market in Turkey. It’s also concentrating on core branches in Anatolia.
Garanti had a 40% return on equity last year (in dollar terms), says chief executive Ergün Özen and is benefiting from a flight to quality, as savers forsake the smaller, shakier banks. “Future growth will be driven by consumer banking,” says Özen, emphasizing that Garanti has leadership in the car loan market.
Garanti’s closest rivals are Is Bank, Akbank and Yapi Kredi Bank. Is Bank is transforming itself from a state sector bank with a big industrial loan book, into a retail and investment group holding some interesting assets. One is its stake in Turkey’s second mobile phone network GSM for which it paid $2.5 billion last year. Is Bank’s millstone is its historical ties with trades unions and the fact that the once-mighty, now dwindling, Republican People’s Party still has a 35% stake and appoints two board members.
Akbank is perhaps the most solid bank in Turkey, but it has been slow to move into new areas, such as telephone and electronic banking. Yapi Kredi has the fastest-growing retail franchise of the four banks but analysts say it lacks a coherent strategy.
Chase has long been one of the best-established foreign banks in Turkey, active in the local capital markets, in project finance and in corporate banking, as well as corporate finance and advisory work. It is one of only three primary dealers among the foreign banks; it is the biggest custodian of Turkish securities; and it has the highest bond-dealing volumes among the foreign banks. It was involved as lead or co-lead in almost every bond issue in Turkey’s borrowing bonanza earlier this year. It has also arranged structured financing for the purchase of military equipment, public road-building, and been mandated for high-yield corporate bond issues and bond issues for several Turkish banks. It has advised on several big Turkish projects, has advised an oil major on selling its distribution network in Turkey, and advised several consortia on mobile phone licence auctions. Its newly-acquired investment bank Flemings was lead manager of the IPO of Türk Ekonomi Bank (TEB).
Global Securities has the biggest market share on the Istanbul stock exchange. It has headed the list of equity traders on the exchange for seven years and has a market share of 4.19% (competing with more than 130 brokers). It also claims to be number one in corporate finance employing 19 professionals, although Istanbul Stock Exchange data suggests that Global is losing ground to others. Mehmet Sairoglu, head of investment banking, says Global placed 48% of the international tranche of the recent Tupras (petrol refineries) privatization. “We placed $172 million,” Sairoglu says. Cynics say this was mostly with one buyer, Soros Fund Management. But Global’s international placement is unrivalled by any other Turkish bank or securities house and new management – Sairoglu joined from the respected investment bank TSKB (industrial development bank) in February 1999 – is helping.
Sairoglu’s former boss at TSKB, Metin Ar, is now running rival firm Garanti Securities, the investment-banking arm of the Dogus group.
Garanti Securities is picking up volume in securities trading and is establishing itself as the market leader in Turkish corporate finance. It was joint global coordinator in the $1.2 billion Tupras (petrol refineries) privatization issue, of which 78% was placed domestically. In 1999 it also advised the Privatization Administration on three privatizations, issued Eurobonds for Ihlas Holding in Germany, and led an equity offering for Batisöke Cement and co-led one for Garanti Bank. Most recently it has worked on a $100 million IPO for Akenerji. Says Metin Ar: “The total issue size of equity offerings led by us this year will constitute 75% of the Turkish market.” Garanti Securities has an interesting relationship with the National Bank of Greece.
They and JP Morgan are setting up a $100 million private equity fund for pre-IPO financing in Turkey.
David Shirreff
United Kingdom
Best foreign bank: Royal Bank of Scotland
Best foreign bond house: Deutsche Bank
Best domestic bond house: Barclays Capital
Best foreign bond house: UBS Warburg
Best domestic equity house: Cazenove
Best foreign equity house: Goldman Sachs
Best domestic house: Lazard Brothers
Best foreign M&A house: Goldman Sachs
RBS may not have the global cachet of HSBC but it does have sound international project and trade financing, syndicated lending and cash management operations. Significant deals include last year’s $2.16 billion financing for the Drax power station in the UK and the $1.8 billion Homer City power station financing in the US. The bank has been a top 5 arranger of syndicated loans for UK corporates for the past three years at least.
Excluding the NatWest acquisition the bank announced interim profits up 35% in May and its 1999 profit before taxation was £1.2 billion, up 20% on the previous year. However, unless Iain Robertson, chief executive of corporate banking, is to change tack dramatically, the acquisition effectively ends any real involvement at the top of international wholesale banking by any bank originally domiciled in the UK. Greenwich NatWest, one of the few niches NatWest had left in international investment banking, will be integrated into the enw bank but will therefore lose its two drivers Chip Kruger and Gary Holloway. No-one at RBS will be able to replace them.
Deutsche Bank’s operation in London is now one of the largest and most powerful global debt, equity and wholesale banking houses anywhere.
In the last year the bank has risen to third in the sterling Eurobond tables; it is one of the leading providers and arrangers of acquisition financing for UK-related M&A; it is in the top three in equity research and this year executed the largest-ever block trade in the UK market, a joint-led placement of 925 million Vodafone shares. Morgan Grenfell Private Equity is also one of the most active firms of its kind in Europe.
Barclays Capital has become one of the leading European debt houses dominating the European loan market and top-ranked in bonds. In sterling Eurobonds it is the undisputed leader, well ahead of second-placed UBS Warburg and the bookrunner of choice for a raft of high-profile names such as KfW. It is third-placed in bookrunning Eurobonds for UK issuers, behind Goldman Sachs and UBS Warburg but its clientele is a wish-list of top UK corporates, banks and asset-backed issuers.
Cazenove is fast becoming the only domestic equity house in the UK. Certainly, it is the only UK-owned institution with internationally-respected equity operations.
It has acted as the lead distributor of more UK IPOs than any other firm over the past five years. Structures range from smaller company flotations where it acts as sole sponsor and broker, to the largest IPOs, where it typically act as global co-ordinator, leading the distribution of shares and managing the syndicate.
In the past 12 months it has acted as bookrunner on 13 international issues worth almost e2 billion, including isues for Freeserve, Pearson, Oxford Asymmetry and Burmah Castrol.
Cazenove is also active in the secondary placement market, arranging rights issues for UK companies over the last five years and we have been involved in the most up-to-date techniques, including the use of tendering for sub-underwriting by institutions.
It has a leading role in structured placings and in leading syndicated issues, as well as participating in syndicates as a co-lead manager, and has executed bought deals with a total value of nearly £23 billion.
The firm is also active in primary and secondary public offerings around the world.
In the past five years it has acted in over 300 issues on behalf of non-UK issuers.
Goldman Sachs is the leading bookrunner both of international equity issues for UK issuers and also of sterling denominated international equity issues. The bank has been active in the tech and telecom sectors with Dialog Semiconductor and Vodafone Airtouch as well as the more traditional media and property sectors.
The demise of Schroders and Robert Fleming – or at least their acquisition by foreigners – leaves few conteners for domestic M&A house.
Even Lazard Brothers is now part of a re-organized Lazard Group that is no longer three groups but one global unit. However, the group’s UK business is still the most highly-regarded source of top level advice: Lazard is where the chairman of UK plc goes before he tells the board his plans. Goldman Sachs is the foreign equivalent.
Simon Brady
