| Buenos Aires: three banks dominate | ||||||
Best bank
Banco Rio
Best debt house
JPMorgan
Best equity house
BSCH
Best M&A house
Morgan Stanley
There are three large, good banks in Argentina: Banco Rio, owned by BSCH; Banco Francés, owned by BBVA, and Galicia, which remains independent. Of the three, Banco Rio had the highest net income in 2000, despite having fewer loans and fewer deposits than Galicia. Its cost-to-income ratio improved to 45% in 2000 from 50.7% in 1999, keeping it the most efficient bank in the country. It also has a rock-solid 18.9% capital base.
Rio’s return on equity, at 15.9%, is roughly the same as that of Francés, and higher than that of Galicia. But it still remains well below BSCH’s target of 25%.
BSCH also picks up the best equity house award, unsurprisingly for a house that has been the number one trader on the Buenos Aires stock exchange since July 1995. That said, it had very little competition. The Argentine equity market is worth just $21 billion in total, or 7.4% of GDP, and many players simply ignore it.
BSCH is pretty much the only player in the tiny Argentine IPO market. It raised more than $120 million in 2000, selling small stakes in newly listed companies largely to domestic institutional investors.
But it can also sell into retail: the $20 million IPO of Quickfood, for instance, in December, was 78% sold to individual investors.
The Argentine debt market is much more important. It is dominated by the beleaguered government, of course, and the largest dealers in government paper are JPMorgan and Deutsche Bank. JPMorgan leads the bond league table for this year so far, but league tables generally exclude bond swaps, which have been the most important part of Argentina’s issuance strategy.
JPMorgan was one of the first two banks to be mandated on Argentina’s recent $29.5 billion mega-swap; the other was CSFB. JPMorgan has also lead-managed bonds for both the city and the province of Buenos Aires in the past 12 months.
Deutsche Bank also has a very strong presence in Argentina, topping the league tables in 1999 and 2000 and arranging a series of international corporate issues. But it seriously fell down on the mega-swap, having to disqualify itself from participating after it sent out in-house research to US investors.
In mergers and acquisitions, Morgan Stanley topped the 2000 league table with four deals worth $6.1 billion, a 56% share of the market.
Its global reach extended as far as the Philippines, in a satellite communications deal, but most of the company’s recent transactions have been deals in which Argentine assets have been rolled up into larger entities. For instance, Morgan Stanley advised Spain’s Telefónica on the acquisition of three local Argentine companies and also advised DirecTV Latin America on its sale into a pan-regional vehicle controlled by Grupo Clarin.
