Best bank:
not awarded
Best equity house:
Nikko Salomon Smith Barney
Best debt house:
Mizuho
Best M&A house:
Goldman Sachs
With a banking sector in as dire a state as Japan’s, no bank deserves the best bank award. Banks that are strong in one area are fundamentally flawed in others. And big doesn’t equate to best.
Mitsubishi Tokyo Financial Group appears to be dealing with its bad assets but it posted an impressive loss of over ¥120 billion ($968 million). Sumitomo Mitsui has profit streams but many remain unsure about its non-performing loans. And while Mizuho and its retail operation is spoken of in terms of potential, it is by no means there yet. Some believe Sumitomo’s management is the most impressive, but other observers attribute this to better presentation skills making them look better. After all it’s just about putting a thin rosy sheet over a big black hole. When the NPL situation will be cleared up is anyone’s guess. Judging on past experience, not for a while. But perhaps Japan’s new prime minister, Junichiro Koizumi, does more than talk a good game, unlike his predecessors.
In the chaos, Nikko Salomon Smith Barney stands out. The joint venture has been an undoubted success – especially in equity. By going into partnership with Nikko, SSB has gained access to a corporate Japan that otherwise would have perhaps remained outside its grasp for a while longer. The joint venture is able to offer strength in the primary and the secondary markets. NSSB’s distribution is unmatched. It is the broadest. With Nikko it has access to Japanese retail, while the Salomon side provides access to European and US institutional investors, and when there is a US listing it can get good access to the US retail market. All angles are covered. The question is often raised as to whether it is a Japanese bank or a foreign bank. It doesn’t matter, it works. Its deal list is certainly impressive. It has been involved in over 55 equity and equity-linked deals. NTT’s $11.42 billion follow-on and NTT DoCoMo’s $8.2 billion, secondary offering, the largest ever non privatization follow-on, particularly stand out.
Mizuho, by virtue of its unparalleled access to Japanese corporates, was involved in the most debt-related deals in Japan. The three banks making up Mizuho were mandated arrangers in over 80 syndicated loans. Put this on top of its 31 bond deals and it has become the Japanese corporates’ choice.
With no immediate end in sight to the economic problems, Japanese companies are facing up to the prospect of having to do something – essentially to restructure and consolidate. Goldman Sachs is leading the charge in this area. Not only is it the leader in deals involving Japanese companies either in the domestic market or cross-border, having delivered 37 deals in the year from May 2000, it also brought foreign companies into Japan. Other investment banks are a distant second. Goldman’s clients included Yasuda Fire&Marine Insurance, Sumitomo Metal Industries and Mitsui Chemicals. The merger announced in November 2000 between Sumitomo Chemical and Mitsui Chemicals was seen by many as a fundamental change in the way domestic corporates now view foreign banks. No longer, it seems, do they just rely on their old cosy relationships with their domestic banks. Both chemical companies chose foreign investment banks, Morgan Stanley and Goldman Sachs. As pressure mounts for change, many predict that corporates will continue the flight to quality and experience.
