Best bank:
Standard Bank
Best debt house:
Deutsche Bank/Rand Merchant (joint award)
Best equity house:
Merrill Lynch
Best M&A house:
Merrill Lynch/Investec (joint award)
The South African market is peculiar. It boasts some of the most sophisticated financial technology and infrastructure in the world yet it is undoubtedly an emerging market. Because so many South African corporates are global players, listed in London or New York, the best of the country’s banks have operations in the major financial centres and can compete successfully with the global players. Yet in their own backyard, the locals are often outdone – particularly in the securities markets – by foreign banks that benefited from relationships with the incoming post-apartheid governments while the leading domestic players were disadvantaged by their perceived links to the old regime.
In the pure banking market, Citibank is the main full-service foreign competitor, though HSBC and Deutsche have strengths in corporate finance and debt markets. Royal Bank of Canada dominates the Euro-rand market, with Toronto Dominion a distant second.
Standard Bank though will take some beating. The bank, which has offices in 14 other sub-Saharan countries and 20 countries on other continents, is the largest South African banking group ranked by assets and earnings and has 1,000 branches in the country.
Because of South Africa’s traditionally first-world financial infrastructure, and banks’ long-established presence in the major financial centres, the bank is a match for foreign entrants in retail banking technology as well as wholesale payments, clearing and custody.
SCMB, Standard’s investment banking arm is a leading player in the local debt markets – it’s number two in terms of volume on the bond exchange. It opened the domestic corporate bond market in 1998 with two deals for Telkom and has been at the forefront of importing Euromarket standards and techniques into the market. More recently the bank has set up SASOL’s medium-term note programme and lead the debut issue from it.
In debt, though SCMB is strong, Rand Merchant’s recent deals, such as the latest Telkom issue, give it the edge this year. The bank has a loose alliance with co-winners Deutsche Bank and together the two firms look capable of dominating the new issues market. RMB has also recently been mandated by Rand Water to arrange the consolidation of its current bonds into two new RW benchmark bonds, and it is a pioneer in the introduction of structured products, such as capital-guaranteed instruments.
Merrill Lynch is ranked number one in market share in both ordinary shares and ADRs of South African companies. It covers 101 companies and employs 29 sales people and traders in the country. The firm led the accelerated global tender for Old Mutual in November 2000 and followed it up with a US$650 million convertible for the same issuer in April this year.
In a quiet M&A market, Merrill Lynch has been the most active adviser to South African bidders and also to South African targets – the tables are distorted by the huge Anglo/De Beers deal. Investec stands out because, alone of its local peers, the bank has a genuine cross-border M&A ability. Over the past year the bank has completed around 100 corporate finance transactions in South Africa valued at R60 billion and is the only local house to figure prominently in global league tables
