Best bank
Commonwealth Bank of Australia
Best equities house
UBS Warburg
Best debt house
Citigroup / Salomon Smith Barney
Best M&A house
UBS Warburg
Since bank bashing has become something of a national sport, Australian banks are getting more customer focused and improving their customer service. At the same time they are trying to reduce costs. In anyone’s books that’s not an easy balance to strike. And on top of this, there has been a deterioration in commercial and corporate lending, although consumer lending remains steady. In an effort to increase customer loyalty the banks are offering ever more products, with some diversifying into bancassurance and more fee based products, most notably Commonwealth Bank of Australia and National Australia Bank. Of the two, CBA stands out and not least because it was involved in the largest domestic take-over in Australia’s history when it bought Colonial Ltd for $5.9 billion.
CBA’s management is described by analysts as a “combination of older bankers mixed in with newer guys to provide an all round better blend.” One competitor however called them a bunch of boy scouts. It would seem a case of sour grapes because CBA is quite clearly a tier one bank.
The bank has the largest ATM, branch and agency network in the country. With its 23% market share, it is also the largest provider of mortgage products. The bank is also innovative. By tying up with other well-branded companies the CBA is strengthening its own franchise. One such agreement entered was with Vodafone. The bank will be the provider of what it calls the first mobile banking service using digital phones.
In investment banking, Australia is UBS Warburg’s patch. It has strength in equity, M&A and international bond issuance.
The M&A market has been busy across all sectors with record size deals being completed. There were two drivers: seeking cost of capital advantages, and cross border expansion. The major market participants in Australia have needed to bulk up their scale so as to compete globally. UBS Warburg was at the forefront, having a hand in the biggest, most important deals. In the past 12 months it grabbed mandates from 35 of the top 50 Australian listed companies. It was sole advisor to BHP, the Australian resources company, on its merger with Billiton. The size of the deal – Australia’s largest – the complexity and international significance automatically put it centre stage in the Australian market. UBS Warburg was also the sole advisor in Foster’s Brewing Group’s $1.45 billion acquisition of Beringer Wine Estates in the US.
In equity and the equity capital markets UBS Warburg is again ahead of the competition. Its powerful primary markets operation is backed up with a secondary markets desk that claims the largest market share on the Australian stock market. Of the capital raising transactions greater than A$500 million in the past year, UBS was involved in everyone as either sole or joint lead manager. It was the sole underwriter and global co-ordinator of equity and equity linked securities to help fund FBC’s Beringer transaction.
UBS Warburg is also strong in fixed income. But the battle for this award is between ABN AMRO, Deutsche and Citigroup/Salomon Smith Barney. In domestic local currency issues ABN AMRO leads, ahead of Deutsche and Citigroup/Salomon Smith Barney. But for best overall debt house, one that competes aggressively in all areas, be it syndicated loans, notes, international bond issues and local currency deals, it’s Citibank/SSB.
Despite not being top in any of the areas mentioned, it consistently has a presence. In all bond issuance it sits just behind UBS and Deutsche, first and secondly respectively. But then on top of this Citigroup/Salomon has a syndicated loan capability too.
Cross border bond deals included Orica Limited’s US$255 million senior guaranteed note. The deal was in two currencies – a first for an Australian issuer. Citigroup/SSB’s US distribution kicked in, with 89% of the issue being sold to US investors, the rest going to Canadians. On the loan side it was involved in 14 deals. Its key transaction was as mandated arranger on the 30% oversubscribed A$9 billion revolving credit facility for Onesteel.
