Awards for Excellence 2002
Best bank: Santander Central Hispano
Best debt house: Citigroup
Best M&A house: JPMorgan
Best equities house: UBS Warburg
Best risk management and treasury house: JPMorgan
Best bank at transaction services: Citigroup
Best bank at cash management: Citigroup
Latin America is a continent of dashed expectations. It has effectively been in a recession for the past five years and there’s still precious little sign of recovery. Argentina’s default at the end of 2001 was, to many, the final nail in the coffin: with hindsight, those banks that abandoned the region at the onset of the Asian crisis in 1997 were simply prescient.
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Citibank in Argentina: despite its huge losses Citigroup will stay on in the country |
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The reversal of fortunes in banking is probably the most pronounced. While Citibank was struggling with its massive exposure to Argentina, Santander was posting some eye-popping numbers.
Citibank’s $2.2 billion in Argentina-related losses was by far the largest write-off of any bank in the country, and brought to chairman and CEO Sandy Weill’s attention just how many of Citi’s Latin eggs were in one basket. Argentina was, with the possible exception of Paraguay, the only country in south America where Citibank had large-scale retail operations, and the giant US bank was slow to protect itself against its exposures to the country. (Admittedly, the larger the exposure, the harder it becomes to hedge.)
The buck stopped very high up: both Citigroup’s head of Latin America, Michael Contreras, and its head of emerging markets, Victor Menezes, were eased out of their jobs. The point man in the region now is Jorge Bermudez, with a shiny new title (CEO of Latin America) and more responsibility than Contreras had: he’s in charge not only of corporate banking but of consumer banking as well. He’s charged with turning around the region for Citibank, and doing it quickly, quite possibly by buying a big Brazilian bank.
One way in which Bermudez seeks to differentiate his bank from Santander is by emphasizing Citibank’s continued commitment to Argentina. Citi has made it clear from the beginning that it’s going to stay in the country; Santander has been dropping many hints that if it doesn’t get what it wants from the government, it’s going to leave. Santander does claim, however, that its franchise in Argentina, Banco Río, is the only bank there to comply fully with the Argentine government’s liquidity requirements.
Ultimately, however, Argentina is now a sideshow: it will be many years before the country’s finances and banking system become healthy enough to be significant to a global bank.
And while Citibank was struggling with its Argentina problems, Santander was making lots of money elsewhere in the region. The Spanish bank’s total Latin profits in 2001 reached ¤1.69 billion ($1.51 billion) -an astonishing number in its own right but also a substantial increase on the 2000 figure of $1.01 billion. (In 1999, Latin America pro-forma profits were just $585 million.)
What’s more, the increased profits can’t simply be put down to the 2000 acquisitions of Banespa in Brazil and Serfin in Mexico. Santander’s cost-to-income ratio dropped to 49.5% in 2001, from 53.1% the previous year, while its return on equity across Latin America was 23.6% in 2001, up from 20% in 2000 and 16.1% in 1999. Excluding Argentina, the bank posted an eye-popping 39.9% return on equity last year. In the biggest three markets in the region – Brazil, Mexico and Chile – Santander was the bank with the highest return on equity.
And in terms of income in the big two markets, Santander was even more impressive: its Mexican profits rose 117% in 2001 while the equivalent figure for Brazil was 149%.
In Mexico, indeed, Santander’s two banks (Serfín and Santander Mexicano) both performed better than Citi-owned Banamex using nearly any measure. Only the fact that neither comes close to Banamex in terms of sheer size prevented Santander from taking home the best bank in Mexico award to sit next to its awards for best bank in Venezuela and best bank in Chile.
Income isn’t coming at the cost of increased risk, either. Santander ended 2001 with a BIS capital adequacy ratio of 14.7% and has actually been shrinking its loan book as Latin America’s wintry economic climate continues to hurt local businesses.
Although Santander has a highly profitable treasury operation, making markets in swaps, options and foreign exchange in the region, it has made no attempt to leverage its client relationships into investment-banking business. That’s where Citigroup is the clear leader in the region.
A truly regional debt house in Latin America has to compete on three fronts: international bonds, domestic bonds, and international loans. Of the three, international bonds get the lion’s share of the attention – and even within that group, it’s usually only the dollar-denominated issues that really get judged.
In terms of sheer quantity, there’s no doubt that JPMorgan remains the biggest house in the Latin international bond market, with Citigroup clearly in second place. Morgan’s team leader, the highly respected Moctar Fall, is probably the brightest star in the emerging-markets debt universe but that hasn’t stopped his team from making some high-profile mistakes. Their 10-year bond for Brazil in January, for instance, which was co-lead managed with Salomon Smith Barney, fell off a cliff as soon as it was launched, and soured the market for Brazilian debt for months to come.
Even worse, in hindsight, was JPMorgan’s high-visibility role in Argentina’s disastrous megaswap: a deal that succeeded in generating enormous fees for Morgan and CSFB while exacerbating Argentina’s indebtedness. The deal also delayed the eventual default, which only made the country’s debt dynamics worse when the inevitable happened.
To be fair to JPMorgan, just about every investment bank in the world wanted that mandate, and the fact that Morgan won it probably shows how in demand its expertise is.
Other banks are active in Latin bond markets: Deutsche and CSFB are still committed to the region, and Morgan Stanley’s Francisco Pujol and his tiny team continue to underwrite highly successful deals for the biggest borrowers in the region. Merrill Lynch and UBS Warburg have done some innovative deals in Brazil (Merrill wins the best debt house in Brazil award this year), and no-one has yet completely written off Goldman Sachs.
But when one looks at the bigger picture, Citigroup simply dominates. Just adding domestic bonds to international bonds is enough to propel Citi to the top of the league table, and adding in loans gives it an unassailable position at number one.
What’s more, those loans are the choicest in the market. They’re the biggest: Citi’s 24.5% market share of Latin loans is almost that of second-placed Bank of America (12.7%) and third-placed JPMorgan (12.2%) combined. And they’re also the best: Citi’s loans tend to have longer maturities and are much more structured than the relatively commoditized US commercial paper backstop programmes in which Banc of America Securities specializes.
Furthermore, risk aversion over the past year has meant that corporate bond issuance has dried up alarmingly, making companies more reliant on the loan market than ever before. Quite aside from the fact that most bond investors simply aren’t interested in most Latin companies, most Latin companies actually prefer it if their cost of international funds isn’t made public.
Over the past year, Latin loan issuance actually exceeded Latin bond issuance, which means that Banc of America Securities and ABN Amro appear in third and fourth place respectively on the overall debt league table, despite barely underwriting any bonds. In such a context, it’s clear that Citigroup, with its dominance of the loan market, should be the Latin American debt house of the year.
Citigroup might have made it to the top of the greasy pole when it comes to debt but it’s still not quite there in M&A advisory. Its biggest deals in Latin America are likely to continue to be those where it advises itself: Citi makes no secret of the fact that it’s looking for some more large acquisitions in emerging markets after the successes of Handlowy in Poland and Banamex in Mexico. Even so, Citi remains very much the number two M&A house in the region as a whole, a position reminiscent of its placing in the Latin international bond market.
JPMorgan, by contrast, seems to get most of the really interesting assignments and also sits pretty comfortably on top of the Latin M&A league table – at least when Citi’s acquisition of Banamex, which was already factored into last year’s awards, is stripped out.
Morgan Stanley and Goldman Sachs will always have mandates, mainly when their multinational clients seek to expand or contract in the region. And CSFB has parlayed its acquisition of Brazilian trading house Garantia into a very strong M&A franchise in Brazil. But in terms of experience across the whole region, no-one can compare with JPMorgan.
There weren’t any huge M&A deals over the past year but JP Morgan advised on some highly complex ones, such as a three-way merger of supermarket groups in central America and the creation of Mexican super-bottler Embotelladoras Arca through the merger of three smaller bottlers with an equity value of more than $2 billion.
And in Brazil, JPMorgan advised mining giant CVRD on two simultaneous M&A transactions that not only needed each others’ success to work but also involved a lot of other players: the more complex part of the deal only started when CVRD lost out to BHP Billiton in the bidding for mining concern Caemi. CVRD then entered into negotiations to persuade Mitsui, which had a right of first refusal on Caemi, to buy the company and then enter into a partnership with CVRD, keeping the company out of the hands of the Australians. Meanwhile, CVRD was spending about $700 million on buying iron-ore producer Ferteco, which, together with Caemi, gave it roughly 35% of the seaborne iron-ore market.
It’s that sort of complex transaction that can take well over a year and involve large-scale foreign-exchange hedging as well in which JPMorgan excels.
The one arm of the Latin capital markets that Citigroup and JPMorgan do not dominate is equities. In fact, no-one really has much of a dominant position, for the very good reason that there isn’t much of an equities market in Latin America in the first place. The bolsas are small and illiquid, full of companies with arcane voting structures, and most of the region’s biggest companies have been bought up by foreigners. And valuations are so low – and therefore the cost of equity capital so high – that no-one wants to take their companies public.
In this unprepossessing landscape one firm stands out as pretty much the only house still doing anything at all: UBS Warburg. It lead managed the last major Latin IPO, that of Mexican airport company Asur in September 2000, and also lead managed a pair of Brazilian deals over the past 12 months: one for a toll road company and one for a water utility. In doing so, it finally placed stocks on Brazil’s long-awaited Novo Mercado, the new board on which only the most transparent companies are allowed to list.
UBS Warburg is also the top stockbroker on the Brazilian Bovespa, which at the moment it pretty much the only active stock market in Latin America – trading on Mexico’s bolsa is negligible.
UBS Warburg’s strategy is to be the last man standing when Latin America’s equity markets finally turn around: the house will have demonstrated a clear commitment to the region, and will have a first-mover advantage. The big question, of course, is whether Latin equity markets ever will turn around. Many players have already decided that they won’t, or that it’s not worthwhile waiting for them to do so.
That said, most of the big US investment banks do have some kind of equity presence in the region, including Citigroup and JPMorgan as well as Merrill Lynch, which has historically led trading volumes and research coverage. JPMorgan even had a couple of Mexican equity deals in 2001, while Deutsche Bank has retained its dominance of Chilean equities.
There is one other bank with broad research coverage: Santander, leveraging its local expertise. In a similar manner, Santander has managed to build an impressive treasury operation in a bottom-up manner, with top-four rankings in forex spot, forex forwards and local debt in all of Latin America’s markets: Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
The operation is highly profitable and growing fast. It also has an enormous number of clients, commensurate with Santander’s big list of corporate account-holders.
The best risk management and treasury operation in Latin America, however, remains that of JP Morgan. Morgan can do the bread-and-butter stuff as well as, if not better than, Santander, although its clients are different: it’s more likely to deal with the multinational’s CEO than the local subsidiary’s treasurer. It can structure highly complex derivatives in the service of a sophisticated risk-management programme, while still providing liquidity to more commoditized markets.
Morgan has New York-based competitors in the world of structured derivatives, primarily CSFB and Deutsche Bank, both of which are now largely staffed with casualties of the JP Morgan merger with Chase Manhattan. Whether either of those two banks will be able to claim Morgan’s crown remains unclear, however: predictions of post-merger implosion were made last year, too, and never really transpired.
What Deutsche Bank does have that JPMorgan lacks is a structured products group closely integrated with its debt underwriting group. Taking advantage of the bank’s client base in Europe, Deutsche can offer loans to individual Latin companies based on standard credit derivative documentation and then, rather than trying to sell off those loans to a syndicate of banks, sell credit-linked notes tied to that specific company to sophisticated European investors.
The last two Latin regional awards, for transaction services and cash management, go inevitably to Citigroup. Citi has dominated Latin America in these areas for decades, and Santander’s valiant attempts to catch up will probably take nearly as long to succeed, if they ever do. After all, companies have very little incentive to change their provider of security services, and Citi’s at the top of its game.
On the transaction services side, Citibank’s main focus at this point is ironing out small inefficiencies in the markets: listening to clients and then lobbying governments to make it easier for offshore clients to open accounts in Chile, for instance, or to make payments in Brazil. It already has market shares of between 65% and 95% in most countries; it doesn’t really compete so much as set the standard to which any potential competitor must aspire.
And in terms of cash management, Citi has a seamless international system that can integrate clients’ cashflows from across Latin America, from collections to payments. Of Citi’s 5,000 corporate customers in Latin America, more than 350 have operations in more than one country, and Citi considers more than 100 of those to be truly regional operations, as opposed to “multi-local” businesses. Wherever those companies are, be it Ecuador or Mexico, they use exactly the same system – one that has already absorbed Banamex’s old technology. Cisco Systems, for example, manages its cash, liquidity and foreign exchange requirements in over 20 countries through a single platform.
ARGENTINA
Nothing awarded
Argentina’s banking system has completely collapsed since the end of the convertibility regime at the end of 2001. Since the country’s financial sector is entirely at the mercy of the government, there is no award for best bank this year. That said, Santander-owned Banco Río claims to be the only bank to comply with the government’s capital adequacy requirements, although the Spanish bank’s commitment to the country is in question. Citibank, on the other hand, will certainly stay indefinitely in the country, despite losing more money there than anybody else.
And Deutsche Bank says that it’s the only entity still extending new loans in Argentina.
On the debt side, there’s a case to be made for automatically disqualifying anybody who continued to lend money to the Argentine government even after it became obvious that it could not pay that money back – which means disqualifying pretty much everybody. CSFB and JPMorgan deserve to be singled out, however, for structuring a $30 billion gamble that went horribly wrong – the June mega-swap. Even institutional investors are now suggesting, not entirely in jest, that all debt capital markets bankers should be automatically barred from landing at Ezeiza International Airport in Buenos Aires.
At least on the M&A side, though, there are already quite a lot of restructuring mandates.
BOLIVIA
Best bank: Banco Bisa
Banco Bisa is the best of the biggest banks in Bolivia, the one with which the most foreigners are familiar. Even so, it hardly counts as large: it made just $5 million in 2001, on $86 million of shareholders’ equity.
BRAZIL
Best bank: Banco Itaú
Best debt house: Merrill Lynch
Best M&A house: CSFB
Best equity house: UBS Warburg
Brazil is the largest and most important market in Latin America but it’s also the one that is proving most difficult for the biggest regional players – Santander, Citigroup and JPMorgan – to crack. In universal banking, the biggest and best names are all domestic – Bradesco, Itaú and Unibanco – but when it comes to investment banking, all three awards this year go elsewhere.
In a tough year for Brazil, Banco Itaú has once again blown away the competition with a world-beating performance. It was the only bank in Latin America whose 2001 profits exceeded $1 billion, and its return on equity was a barely believable 31.5%.
Itaú’s first-quarter 2002 earnings of R$504 million ($209 million) were slightly disappointing but the bank remains by far the strongest domestic bank in Latin America, and a formidable competitor for foreign-owned institutions to boot.
Itaú has also shown an acquisitive streak in the past year, buying Banco Sudameris Brazil, the country’s thirteenth-largest bank, from Italy’s IntesaBCI for $1.4 billion.
Half of that was paid in cash; the other half was subordinated debt. And a large part of the reason why IntesaBCI was happy taking Itaú’s junior paper was that Merrill Lynch had opened up the market for it earlier in the year, in a bond offering that ultimately became one of Euromoney’s Latin deals of the year. It was the first-ever hybrid deal out of Latin America, and the first tier 2 issuance by a Brazilian entity.
Merrill also structured two groundbreaking securitization deals for Banco do Brasil: one of future flows, and one of interbank flows.
Merrill’s successes in the corporate arena in Brazil are important, because the sovereign – by far Brazil’s largest international borrower – makes sure that it spreads its mandates around evenly.
Nevertheless Merrill can even demonstrate superiority on the sovereign side: its issue of $1.25 billion in seven-year bonds with Goldman Sachs in March went much more smoothly than January’s disastrous $1.25 billion of 10-year bonds from JPMorgan and Salomon Smith Barney.
Banco Itaú needed some very good advice during the two-year negotiation for Banco Sudameris, and for that it turned to CSFB.
The Swiss bank tops the M&A league tables in Brazil not just in deal value but also in number of deals; it was also involved in two of the three largest transactions in the past year. One was Itaú-Sudameris; the other was advising Odebrecht in a series of complicated transactions, including public auctions and consortium-forming, aimed at creating the largest petrochemicals group in south America.
There was really no competition for the equity award: UBS Warburg not only tops trading volumes on the Bovespa exchange but also lead managed both of Brazil’s IPOs over the past year: first for toll-road company Companhia de Concessoes Rodoviaries, and then for water utility Sabesp. (One other water utility was meant to undertake an IPO, through Salomon Smith Barney and CSFB, but that deal was withdrawn.)
CHILE
Best bank: Santander
Best debt house: Citigroup
Best M&A house: JP Morgan
Best equities house: Deutsche Bank
The big story in Chilean banking over the past year was consolidation. First the two banks controlled by the Luksic family, Banco Edwards and Banco de Chile, merged to form the country’s largest bank. It was not to be for long, though, as Santander then picked up the gauntlet and merged its own two entities – Santander Chile and Banco Santiago – taking over the top spot.
Santiago, though a good bank in its own right, was never quite as lean as Santander Chile, so the merger has had a slightly dilutive effect on some of the ratios. Even so, the combined bank’s return on equity of 27% and cost-to-income ratio of 42% beats any other Chilean bank hands down.
In the debt markets, Citigroup dominates all the league tables, with a 35% share of international bond issuance, a 32% share of international debt issuance and a stunning 52% share of local corporate bonds.
The M&A league tables are even more one-sided, with JPMorgan having a 55% share of announced deals and a 65% share of completed deals over the past year. Its headline deal was the Banco Edwards-Banco de Chile merger, which was valued at $943 million.
In the thin Chilean equities market, Deutsche Bank has taken the strong Bankers Trust franchise it inherited and beefed it up further: it recently received Chile’s first banking licence in 20 years. There haven’t been any IPOs recently but Deutsche has executed the last couple of tender offers on the bolsa and is also in the top three banks by trading volume.
COLOMBIA
Best bank: Banco de Bogotá
Best debt house: JPMorgan
Colombia is going through hard times at the moment, and the lack of growth in the country as a whole is stunting the banking system. By far the most profitable bank is Banco de Bogotá, which had $74 million of income in 2001, for an 18.1% return on equity. The only larger bank, Bancolombia, did manage to turn a profit last year, but only of $39 million.
Colombia is also a country where Citigroup barely registers on the debt league tables, which are dominated by JPMorgan, which was involved in six deals over the past year. (No-one else had more than two.) One of those deals was the debut in the international capital markets of the District of Bogotá, with $100 million in six-year notes yielding 9.5%. It was the first non-sovereign deal out of Colombia in more than three years, and attracted more than 20 accounts, mainly from the US but also domestically and in Europe.
COSTA RICA
Best bank: Not awarded
Best debt house: Deutsche Bank
Best M&A house: JPMorgan
Costa Rica’s banking system remains dominated by the three large state-owned banks, none of which is any good.
Deutsche Bank dominates debt capital markets. It issued the only bond out of the country in the past year – a $250 million 10-year global bond for the sovereign – and also arranged the single largest bank financing ever placed for a Costa Rican borrower: a $120 million facility for the international airport.
JPMorgan wins the M&A award because of its three-way deal to create a supermarket powerhouse in central America, stretching from Costa Rica through Nicaragua, Honduras and El Salvador to Guatemala. With one of the partners based in the Netherlands, the merger involved some difficult negotiations and set the standard for central American consolidations.
DOMINICAN REPUBLIC
Best bank : Banco Popular Dominicano
Banco Popular Dominicano is the flagship of the banking sector in the Dominican Republic, with a quarter of all the country’s deposits and a very impressive return on equity last year of 23.7%.
ECUADOR
Best bank: Banco del Pichincha
Pichincha dominates Ecuador’s banking system, which is emerging gingerly from the financial-sector crisis of 1999. It has 31% of sight deposits, 28% of total capital in the system and is pulling away from its closest rival, Produbanco.
EL SALVADOR
Best bank: Banco Agrícola Comercial de El Salvador
Best debt house: CSFB
The best bank award in El Salvador was probably the closest-run contest in Latin America. Banco Agrícola Comercial de El Salvador edges it, just because it is significantly larger than its rival, Banco Cuscatlan, with $216 million of shareholders’ equity compared with $145 million. They’re strikingly different banks, though, with Agrícola taking a cautious approach based on a large retail base and Cuscatlan much more aggressive, looking to expand elsewhere in central America, and concentrating on corporate clients.
There were no such problems in awarding the debt house award: CSFB has lead-managed all of the country’s debt issues in 2001 and 2002, including a $500 million 30-year bond in April.
GUATEMALA
Best bank: Banco de Occidente
Best debt house: Morgan Stanley
Guatemala has too many banks. And they are all too small. Banco de Occidente is not particularly impressive on a global scale but it’s good by Guatemalan standards and could be an agent for bank consolidation. Morgan Stanley wins the debt house award for its stewardship of Guatemala’s 10-year, $325 million global bond in November. The whole transaction was completed in three hours from launch to the closing of the order book and was oversubscribed, with $414 million in orders.
| Banamex: outstripping local standards | ||||||
MEXICO
Best bank: Banamex
Best debt house: Citigroup
Best M&A house: JPMorgan
Best equities house: JPMorgan
Citigroup and JPMorgan swept the board in Mexico this year. The best bank remains Banamex, even after going through three turbulent months of merger transition with Citigroup. It’s not quite as big as rival Bancomer but it is more profitable: even after some extraordinary merger-related provisioning, it still managed to make Ps1.5 billion ($154 million) in the first quarter, compared with Bancomer’s Ps1.3 billion.
Santander’s two franchises, Santander Mexicano and Serfín, between them made just as much money, and certainly beat Banamex in terms of return on equity. Banamex, however, has an unrivalled set of relationships with all sectors of the economy: its total private-sector loans are Ps120 billion, compared with Ps17 billion and Ps21 billion for Serfín and Santander Mexicano respectively.
Banamex’s parent, Citigroup, issued successful bonds for the government as well as for state oil company Pemex and media group Televisa, giving it a strong if not dominant position in Mexican international bond issuance.
On the overall debt league table, however, it crushes all its competitors, with a stunning 22 deals, compared with second-placed JP Morgan’s nine. Citi issued dollar-denominated loans for wireless company América Móvil and cement giant Cemex, as well as getting involved in other types of debt capital markets work such as amending a $75 million local bond for Hylsa and swapping $3.3 billion of Mexican Brady bonds in an exchange offer for new globals.
On the M&A front, JPMorgan dominated the past year, with seven announced deals to Morgan Stanley’s four, Goldman Sachs’s three, and Citi’s two, not including last year’s Citi-Banamex merger.
One of the seven was the complex merger of three small Mexican Coca-Cola bottlers – Procor, Argos and Arma – to create Embotelladoras Arca, the third-largest Coke bottler in Latin America.
JPMorgan was the exclusive adviser to all parties and came up with the structure whereby privately held Procor and Arma first merged to create Arca, which then listed its shares and tendered them in a swap offer for all the publicly listed Argos shares.
JPMorgan also managed the only recent IPO in Mexico – the May 2001 listing of Siderca.
Morgan was also responsible for a $100 million rights offering from wireless company Iusacell in November: Mexico’s sole international public equity transaction over the past 12 months. For those two deals, it gets the equity house award, despite not usually being considered a leading player in Latin equity markets.
PANAMA
Best bank: Banco General
In a country known more for its status as a tax haven than as a home for good banks, Banco General is the only private Panamanian bank with an investment-grade rating from Standard&Poor’s. It’s no longer the biggest bank but retains its solid reputation.
PARAGUAY
Best bank: Citibank
Citibank is Paraguay’s largest bank in terms of deposits, loans, assets and equity, and is fully integrated into Citibank’s regional network. It made $15.9 million in 2001, accounting for 29% of the profits of Paraguay’s entire banking sector.
PERU
Best bank: Banco de Crédito del Perú
Best debt house: Citigroup
Banco del Crédito del Perú continues to dominate the Peruvian banking system and managed to earn $52 million in 2001, more than 150% up on 2000’s result. The profit still represents a return on equity of only 9.7%, however.
On the debt side, Citigroup lead managed Peru’s debut global bond, as well as achieving a 55% market share in domestic corporate bonds. It also managed a 62% market share of international debt issuance, including a $105 million medium-term financing for the Transmantaro electricity line.
URUGUAY
Best bank: Not awarded
Best debt house: Deutsche Bank
Uruguay’s banking system is the first thing that most people point to when they want to prove that Argentine contagion really exists. A bank run prompted by Argentine depositors desperate for cash has crippled Uruguay’s banks, and the biggest and most-respected of them, Banco Comercial, suffered from bad publicity when the brothers running it, Carlos and José Rohm, were arrested in Argentina on money-laundering charges.
On the international debt markets, Deutsche Bank was joint bookrunner on a sovereign $300 million 10-year bond in November, following this up with a $250 million seven-year bond in March, which was upsized from $200 million. Deutsche also has local market presence in Uruguay.
VENEZUELA
Best bank: Banco de Venezuela
Best debt house: CSFB
Best M&A house: Goldman Sachs
Santander’s Banco de Venezuela is the best and also the largest bank in the country, now that it has completely digested its acquisition of Banco Caracas. It is number one in loans and deposits and has a much lower ratio of non-performing loans (2.5%) than Venezuela’s 5.3% average. It has also kept its costs well under control, with its cost/income ratio plunging to 52.6% in 2001 from 63% a year previously. With its return on assets reaching 3.8%, up from 3.4% in 2000, Banco de Venezuela’s only challenge now is to reach the kind of ratios seen elsewhere in Santander’s family of banks. It already sets the standard for Venezuela.
CSFB retains its excellent relationship with the government of Venezuela, having lead managed every sovereign bond deal since May 2000, and every euro-denominated bond ever. Its market share of Venezuelan bonds over the past year was a stunning 65%, compared with second-placed JPMorgan’s 21%.
Goldman Sachs wins the M&A award on the strength of the first ever successful defence in Latin America. In August 2001, AES launched a $1.4 billion hostile offer for CANTV, the leading telecommunications company in Venezuela. CANTV hired Goldman, and came up with a self-tender offer at a 25% premium over AES’s offer; AES couldn’t match that, and withdrew.
