Awards for Excellence 2002
Best bank: Svenska Handelsbanken
Best debt house: Citigroup/Schroder Salomon Smith Barney
Best equity house: Enskilda Securities
Best M&A house: Goldman Sachs
Best at risk management and treasury: Citigroup
Best at cash management: Danske Bank
Best at custody: Nordea
Consolidation and expansion has continued to preoccupy many of the banks in the Nordic/Baltic region. In February 2001, two Swedish banks – Skandinaviska Enskilda Banken (SEB) and FöreningsSparbanken (Swedbank) – proposed a merger that would have created a dominant Nordic player but the project was abandoned in September. SEB and Swedbank have been increasing their interests in the Baltic states. Swedbank owns 60.1% of Hansabank, which wins the best bank award in Estonia, its home market, as well as having a strong presence in Lithuania and Latvia. Since 2000, SEB has been working with Vilniaus Bankas in Lithuania and has integrated Latvijas Unibanka in Latvia. It majority owns Eesti Ühispank in Estonia.
Despite this, Svenska Handelsbanken and Nordea of Sweden and Denmark’s Danske Bank dominate. Nordea has been focused on the internal consolidation of its pan-Nordic operations. In December 2001 the banks in the four Nordic countries began to operate under the Nordea brand. Christiania Bank og Kreditkasse in Norway, MeritaNordbanken in Finland and Unidanmark in Denmark. Although the bank has the strongest pan-Nordic distribution, it is yet to build up its investment banking.
Svenska Handelsbanken has also been busy expanding its business and wins our award for best bank in the region again this year. In 2001 it acquired Midbank, strengthening its position in Denmark. It also received permission to demutualize its life insurance company, Handelsbanken Liv. This will encourage competition by allowing customers to move insurance funds to other companies.
Last year, for the 30th consecutive year, Handelsbanken achieved the highest return on equity in the Nordic region at 18.3%. Handelsbanken also increased its market share in lending, deposits and net new inflows to mutual funds during 2001. Most important, the bank has consistently scored highly on independent surveys measuring client satisfaction.
Debt house close race
The award for best regional debt house goes to Citigroup/Schroder Salomon Smith Barney, with ABN Amro hot on its heels. Both have performed extremely well in the region in debt capital markets, often completing deals together. For example, they were joint bookrunners on an issue for the Republic of Finland that at e6 billion ($5.7 billion) was the largest ever syndicated government bond deal. Although they are extremely close in issuance for sovereigns and corporates, ABN appears slightly weaker in financial institutions issuance and is quite weak in lending.
Enskilda Securities wins the regional award for its performance in equities over the past year. It is 77.5% owned by SEB and 22.5% owned by Orkla Finans, hence Orkla Enskilda Securities was formed in 2000 in Norway. Although the bank does not top the league tables it is involved with many Nordic deals. In a difficult environment for IPOs it was joint bookrunner and joint global co-ordinator with CSFB on an issue for Alfa Laval in May this year. Although the deal size was halved, the shares did well in the after market. Enskilda is also well known for its research capabilities and offers strong sector research. Further, it has a leading market share in secondary market trading on all four Nordic exchanges.
This year’s best M&A house is Goldman Sachs. In terms of deals completed in the region over the past 12 months, Merrill Lynch, Morgan Stanley, Goldman Sachs and UBSW huddle at the top of the league tables, with local players Carnegie and Nordea not far behind. However, the award goes to Goldman for its involvement in top deals across Sweden, Norway, Denmark, and Finland. It was the lead adviser to Finnish telecom Sonera in its merger with Swedish telecom Telia, the largest Nordic deal yet. It was sole adviser to Microsoft in its $1.3 billion acquisition of Danish software house Navision. It advised Norwegian telecom Telenor in the $1.1 billion acquisition of the remaining stake it did not already own in Hungarian mobile operator Pannon. Goldman also advised German company VAW Aluminium on its $2.8 billion sale to Norsk Hydro.
Citigroup is popular with Nordic corporate treasurers and in Euromoney’s May 2002 foreign exchange poll was rated best at Norwegian krone and Swedish krona, and second in Danish krone behind Deutsche Bank. Citigroup/SSSB has a strong franchise in the Nordic region and the group works with many of the top corporates. It works with corporate clients to offer strategic liability analysis such as strategic currency exposures and interest rate exposures, complementing clients’ own risk management systems. Citigroup’s derivatives team also works closely in structuring the bond issues it does for clients and executes hedges for these. Although local banks also have good derivatives capabilities and are good in local currencies, Citigroup offers these plus strength in non-Nordic currencies.
Although Nordea continues to offer top services in cash management to Nordic corporates it is Danske Bank that wins the award this year. Danske offers a common IT platform linking all of its branches. This electronic banking system, known as its Business/TeleService, enables customers to use a single entry point for regional businesses. Danske is also working on an extended version of its cash management product, called Danske Bank Business Online, that can include more products.
Nordea is the winner of the best at custody category for its pan-Nordic presence and high status in custody services. It had a total of e3,570 billion of assets in custody as at the end of April 2002 and completes approximately 17,000 transactions a day. Although legally Nordea is considered to be four separate banks spread over the Nordic countries, it offers a single interface for clients. It also offers custody services to the Baltic states either directly or through an agent bank.
Julie Dalla-Costa
DENMARK
Best bank: Danske Bank
Best debt house: UBS Warburg
Best equity house: Danske Securities
Best M&A house: Nordea Securities
Danske Bank wins Euromoney’s award for best bank in Denmark again this year. Early in 2000 it acquired RealDanmark, generally considered the third best bank in Denmark behind Nordea, and since the deal’s completion the bank has been performing extremely well. The bank reported a small reduction in its costs during 2001 and expects a further 7% reduction this year. Further, RealDanmark’s customers have benefited from being brought into Danske Bank.
Danske is Denmark ‘s largest banking group and has the strongest retail franchise, with a domestic market share of 35% to 40% and a significant part of public, institutional and corporate sectors. It has a central IT platform that enables it to service customers across distribution channels, business areas and national borders. The platform runs on a multi-currency principle and operates continuously.
As well as offering services to retail, corporate and institutional clients, Danske Bank provides insurance services through Danica insurance group and institutional asset management. The Danica insurance group has had success with its proprietary insurance product, with sales between January and May 2002 reaching Dkr600 million ($76.5 million).
It’s a close call for best debt house in Denmark this year between UBS Warburg and Goldman Sachs. The two institutions top the league tables for the 12-month period, with the same number of deals.
UBS Warburg and Goldman Sachs acted as joint bookrunners for TDC’s e1.35 billion ($1.28 billion) inaugural benchmark Eurobond issue in spring 2001 and again for its e750 million 10-year benchmark offering in April this year. However, UBS Warburg takes the award, having been involved with a larger number of deals in a capacity other than bookrunner.
In July 2001 Danske Securities became an independent subsidiary of Danske Bank and wins our award for best equity house. Although the firm does not top the league tables for the 12-month period, those that do are credited with few deals. Danske Securities is to be found not far down the ladder and acted as sole bookrunner and global coordinator for the international private placement of shares for NeuroSearch, a Danish research and development centre. Danske also has the highest turnover in equity trading on the Copenhagen stock exchange.
SSSB tops the M&A league table for the 12 months with some impressive deals including advising Danish software house Navision in its takeover by US giant Microsoft. However, Nordea Securities scoops the award for best M&A house this year. Although it comes in behind SSSB in the league tables, it also advised Navision in its deal with Microsoft and has advised more Danish companies on M&A deals.
ESTONIA
Best bank: Hansabank
Best debt house: Hansabank
Best equities house: Hansabank
Best M&A house: Trigon Capital
Financial sector consolidation in Estonia is more advanced than in Latvia and Lithuania. The two largest banks are owned by Swedish banks: Hansabank 60% owned by Swedbank and Eesti Uhisbank 98% by SEB. The third-largest is Sampo Bank, which is 95% owned by the Finnish bancassurance Sampo Group. Nordea also has a branch in Tallinn. It is Hansabank that wins the award for best bank this year with market share of over 50%. As well as being the largest bank, Hansabank also has the leading internet bank. Although Nordea is often viewed as the frontrunner in internet banking, Hansabank says it often gets customer feedback expressing a preference for its internet banking service. At the beginning of this year it also introduced a specific product for corporate customers.
Another development for Hansabank has been growth in credit card usage. Hansabank has around 800,000 active customers but had only issued about 20,000 credit cards throughout 2000. But in 2001 it launched a card with a new concept, issued more than 70,000 cards during the year and now has a 35% market share.
Hansabank is also our choice for best debt house and best equities house. It is the dominant player in the Estonian debt markets, having arranged CP worth more than EKr4 billion ($246 million) on the primary market, about 70% to 75% of total issuance. It also has the dominant position in the secondary market, which consists solely of corporate paper, mostly short term. This year it introduced an innovatively structured deal to the local market when it arranged a five-year bond as a private placement for the Port of Tallinn at a high rate. In 2001, it was also joint arranger of a e40 million ($38 million) syndicated loan for Estonian Telecom.
Although there has been no new issuance over the past year, since September 11 both Estonia and Lithuania have seen more foreign investor involvement in their secondary equity markets. The trading turnover for the Tallinn stock exchange was e94 million during the first quarter of 2002, 54% up on the same period in 2001.
Hansabank wins best equity house because of its level of involvement in the secondary market and its high-quality research. It is by far the largest trader on the exchange and has been for many years. In May 2002 it was responsible for 67% of total turnover, about 12% up on end-2001.
Trigon Capital has scooped the award for best M&A house in Estonia this year although the competition between it and Suprema Securities is high and the two houses often act together as advisers.
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Nordea Bank CEO Lennart Brabe: his bank is market leader in all sectors in Finland |
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FINLAND
Best bank: Nordea
Best debt house: Citigroup/SSSB
Best equity house: Nordea Securities
Best M&A house: UBS Warburg
Nordea, until recently known as MeritaNordbanken, is the largest bank in Finland. Other major players include Okobank and Sampo Bank but Nordea leads the market in corporate and institutional services, with market share of 46%. It is also a leader in retail services with a 35% market share, as well as in asset management with 28%. The best debt house award goes to Citigroup/SSSB. It was joint bookrunner with Goldman Sachs on a $750 million issue last year for Stora Enso, the first global dollar SEC registered bond for a Nordic corporate. The bank was also joint bookrunner with ABN Amro, Nordea and Barclays Capital for a e6.5 billion ($6.1 billion) issue for the Republic of Finland.
The primary equity market in Finland over the past 12 months has been quiet, with the banks topping the league table for their joint involvement in single deals. Although SSSB tops the table for its role as sole bookrunner on international private placements for Metsa Serla and Stora Enso, Nordea Securities wins the best equity house award. ArosMaizels Corporate Finance, now known as Nordea Securities, acted as sole bookrunner on the domestic offering for Metsa Serla and as domestic lead manager and co-lead manager on its international private placement. In the secondary market it trades the highest volume on the Finnish stock exchange.
Merrill Lynch should be credited this year for its involvement with the Telia and Sonera deal, as well as acting in UPM Kymmene on the largest-ever cash acquisition in the European paper industry.
But the award for best M&A house goes to UBS Warburg. Examples of its deals include advising UK brewer Scottish&Newcastle in its $1.8 billion acquisition of Finnish company Hartwall as well as advising BC Partners in its public offer for Sanitec Corporation, which was the largest public-to-private in the region at the time.
ICELAND
Best bank: Islandsbanki
Best debt house: Bunadarbanki
Best equities house: Kaupthing
Best M&A house: Kaupthing
The three main competitors for best universal bank in Iceland are Islandsbanki, Landsbanki and Bunadarbanki. Although Landsbanki and Bunadarbanki are both highly rated, the award goes to Islandsbanki, which was created in 2000 through a merger between Iceland’s second-largest commercial bank and largest investment bank. Since then the bank has been able to realize synergies. Through strict cost control and a 32% increase in net interest income in 2001 it has increased its earnings from IKr622 million in 2000 to IKr3.14 billion ($35.3 million) in 2001.
Islandsbanki is the leading provider of funds to domestic corporates, with a 39% market share, compared with Landsbanki’s 26% and Bunadarbanki’s 21%, which is an increase from 2000. Islandsbanki is also active in providing trade finance products as well as having a strong investment banking arm that actively participates in the debt and equity markets, and, to a lesser extent, because of the lack of activity, in M&A deals. It claims market leadership in structured deals. The bank also offers treasury services, trading in 18 currencies, and risk management products and provides cash management and custody services for Icelandic securities and domestic investors in foreign securities.
CSFB should be acknowledged for topping the debt league table for its role as joint bookrunner with Commerzbank Securities on the only transaction for the Republic of Iceland expected this year and its role as joint bookrunner with Barclays Capital in Islandsbanki’s e375 million ($359 million) issue. But the award for best debt house goes to Bunadarbanki, with Islandsbanki close behind. Bunadarbanki’s largest local competitors rate it highly and the bank claims a 55% market share in issuance for non-financial institutions for 2001, compared with Islandsbanki’s 40%.
Over the past year, Bunadarbanki has arranged 10 non-financial corporate issues for 10 separate issuers totalling IKr7.2 billion. Highlights include a IKr1.5 billion index-linked issue for SIF, the world’s largest producer and seller of fish and fishery products, and a IKr500 million index-linked issue for Icelandic pharmaceuticals company Pharmaco. The bank also organized four issues for financial institutions, excluding those issued for Bunadarbanki, and claims a 33% market share in trading of treasury bonds and notes.
Kaupthing wins the award for best equity house, having completed all six of the largest offerings on the Iceland stock exchange in 2000 and 2001. The bank was involved with a e45 million share offering for Icelandic food-processor Bakkavor. It also acted as bookrunner on a e30 million share offering for Kaupthing Bank. It has the largest market share – 39.3% – in equity trading on the Iceland stock exchange.
Kaupthing also scoops the award for best M&A house in Iceland. Although there was a low level of activity in M&A and corporate advisory over the 12-month period, Kaupthing advised an Icelandic company in the largest acquisition in the country to date. Bakkavor acquired UK food producer Katsourish Fresh Food for £100 million ($149 million) in November last year. Also last year, Kaupthing and Deutsche Bank advised Bauger, Iceland’s largest retailer, in its acquisition of a 20% stake in UK retail group Arcadia for close to e140 million.
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Riga: Parex Bank dominates banking in Latvia’s capital and country-wide |
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LATVIA
Best bank: Parex Bank
Best debt house: Parex Bank
Best M&A house: Parex Bank
The award for best bank goes to Parex Bank again this year although Hansabanka is giving it a run for its money. Veikko Maripuu, head of research at Suprema Securities, says: “Hansabanka is number one in terms of current strengths and dynamics – that is, attracting new customers, introducing new services and products and integration.” Latvijas Unibanka is also a major player in the Latvian market, with the second largest market share in assets, issued loans and deposits. But Parex is the largest bank and has continued to enjoy client growth – up 30% in 2001 – mainly on the retail side. It has the widest network of branches and client service centres and has enjoyed growth of more than 20% in both assets and deposits. In 2001 it achieved the highest profit in the banking sector since Latvia gained independence and is the first bank to surpass $1 billion in assets. It offers risk management, treasury and custody. The best debt house award has also gone to Parex Bank. The bank has 27% of the market share in debt traded on the Riga stock exchange, followed by Latvijas Unibanka with 22% and Suprema Securities with 19%. In April this year Parex acted as joint lead manager with Morgan Stanley on a $20 million bond issue for Dutch bank Rabobank International. In November last year it also co-lead managed a e200 million ($188 million) Eurobond issue for the Republic of Latvia.
The M&A market in Latvia has been quiet. However, Parex wins the award for its role in such deals as the privatization of the leading oil and oil products shipment company in the Baltic Sea region Ventspils Nafta and Gazprom’s acquisition of a minority stake in Latvijas Gaze.
LITHUANIA
Best bank: Vilniaus Bankas
Best debt house: Vilniaus Bankas
Best equity house: Vilniaus Bankas
Best M&A house: VB Vilfima
Vilniaus Bankas wins the award again this year for best bank in Lithuania. It is wholly owned by SEB and has the largest market share in assets, loans and deposits. Hot on its heels is Hansa-LTB. In 1999 Hansabank’s Lithuanian subsidiary began operating and last year Estonia’s Hansabank acquired Lietuvos Taupomasis Bankas (LTB). Hansa-LTB now has a major presence in the Lithuanian market. The third major player is the Lithuanian Agricultural Bank.
In the past year Vilniaus Bankas has increased its net profit by 15.8% to Lit95.2 million ($26 million) for 2001 from Lit82.2 million in 2000. During 2001 the bank’s business customers increased by 10% to reach 52,400 and its loan portfolio to large corporates increased by Lit48 million.
During 2001 Vilniaus Bankas’s total assets rose by 11.8% and there was a 14.7% growth in customer deposits to reach Lit4.2 billion. The bank has also had continuing success in e-banking with the number of users in 2001 increasing 4.5 times to reach over 50,000. Corporate customers using its PC banking service, VB Telebankas, increased by 26% last year, and customers for its phone banking service grew by 50%. Last year, the bank introduced a GSM phone service and attracted 4,500 customers in the last quarter of the year.
Vilniaus Bankas also scoops our awards for best debt house and best equity house. With little activity in the capital markets we decided to give the award on the basis that the bank had the largest turnover on the Lithuanian exchange in equities and debt securities and because of its 42.4% market share in loans to customers. Brokerage firms Kapitalo Srautai and Finasta are also top performers in Lithuania’s secondary equity market, followed in market share by Suprema and Hansa-LTB. Vilniaus has by far the highest proportion of total turnover in debt securities on the exchange.
The award for best M&A house goes to VB Vilfima, which is 70% owned by Vilniaus Bankas. The house, however, faces increasing competition from independent Prime Investment, as well as from Baltic houses Suprema Securities and Trigon Capital. As well as its involvement in privatizations, restructurings and strategic sales, VB Vilfima advised Alma Littera – one of Lithuania’s leading publishing companies – in its acquisition of educational book publisher Sviesa, creating the largest publisher in the three Baltic states.
NORWAY
Best bank: Den norske Bank
Best debt house: Citigroup/SSSB
Best equities house: Den norske Bank Markets
Best M&A house: Goldman Sachs
Den norske Bank, Union Bank of Norway and Nordea, through its acquisition of Christiania Bank, are the leading banks in Norway. Although Nordea is making strides in its Nordic presence, analysts feel that Christiania has taken its eye off the market in Norway because of its internal merger with Nordea. UBN is a leading savings bank in the country and formed a financial group in 1999 called Gjensidige NOR Group, including an insurance group.
Den norske Bank, which wins our award for best bank, is Norway’s largest banking group, with total assets of NKr460 billion ($60 billion), and has the leading market share. The bank has the largest capital markets operations and offers financial products and services to corporates and financial institutions as well as individuals. Further, DnB and Storebrand have announced a merger that, if successful, will create a leading financial services group in Norway and the Nordic region.
The award for best debt house goes to Citigroup/SSSB. Although Merrill Lynch comes in top by market share, its deals have been mainly confined to financial institutions. SSSB comes in close behind and has conducted more deals for corporates including the inaugural $600 million issue for Norske Skog in October last year just after the events of September 11. It also did deals for Telenor and SAS.
Den norske Bank Markets gets the best equity house award this year. It comes in third behind Morgan Stanley and UBS Warburg in terms of primary equity market share but all three were involved with the e3.4 billion ($3.2 billion) Statoil IPO, the biggest deal in Norway during the year. While Morgan Stanley and UBS Warburg were joint bookrunners, DnB was domestic lead manager. The Statoil IPO was also an impressive deal in that the timing was difficult, coinciding with a peak in the oil cycle. Most demand came from international institutional investors (78%) and although UBS Warburg generated over 60% of the total institutional investor demand, DnB was sole bookrunner on Statoil’s domestic offering to raised almost Nkr1.7 billion.
The largest M&A transaction in Norway again involved Statoil. In July, it acquired 15% of the Norwegian State Direct Financial Interest SDFI’s oil and gas assets for $4.3 billion. Statoil was advised by Lehman Brothers while Goldman Sachs advised the Norwegian government on the SDFI sale. Also, in June last year 18% of Statoil was privatized. Lehman Brothers, Goldman Sachs, UBS Warburg and Den norske Bank acted as advisers to Statoil.
SWEDEN
Best bank: Svenska Handelsbanken
Best debt house: Citigroup/SSSB
Best equity house: Citigroup/SSSB
Best M&A house: Carnegie
The dominant players in the Swedish market are Svenska Handelsbanken, SEB, Swedbank and Nordea. Swedbank and SEB proposed a merger in February 2001 but these plans were abandoned in September. Meanwhile, Handelsbanken has been able to gain extra market share.
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Svenska Handelsbanken and Den norske Bank: the most universal of Swedish banks with an increasing market share, and Norway’s leading banking group |
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One analyst says: “Swedbank is practically non-existent in large corporate or investment banking, SEB is weak in retail and Nordea in Sweden has yet to build up its investment banking.” All three banks have been losing market share whereas Handelsbanken is strong across the board. It has been gaining market share and is well known for having very high levels of service. Svenska Handelsbanken is the most universal of all the Swedish banks and wins our award for best bank. It is closely followed by SEB which has strong investment and commercial banking operations. However, Handelsbanken been gaining more ground on SEB over the past year, mainly because of the failed merger. Although the standard of competition among banks participating in Sweden’s debt market is high, Citigroup/SSSB has scooped the award for best debt house for its role in some of Sweden’s top deals. The bank acted as joint bookrunner with ABN Amro on the largest-ever Nordic corporate bond, consisting of a £250 million ($370 million) and a e2 billion ($1.9 billion) issue for Ericsson. The two banks also acted as joint bookrunners on a $1 billion issue for the Kingdom of Sweden: the first time the sovereign had come to the dollar market in four years. However, SSSB also acted as joint bookrunner with Morgan Stanley on the inaugural issue for SAS and with Goldman Sachs on the first ever SEC registered global dollar bond for $750 million for Stora Enso.
Citigroup/SSSB wins the best equity house award for its involvement in the top equity deals in Sweden and is closely followed by CSFB and Morgan Stanley. In a region usually dominated by privatization, SSSB was sole bookrunner for Stora Enso on one of the few accelerated equity offerings during the period, valued at e355 million and priced at a 2.7% discount.
SSSB is also credited for its role as joint bookrunner with CSFB on a $968 million convertible bond offering for ABB International Finance in April this year. Equity-linked deals such as this are not often seen. Last year equity linked made up 1.1% of total issuance in the Nordic region; this year it makes up 43.3% of total issuance.
The award for best M&A house this year goes to Carnegie for its impressive role as main adviser to Telia in its bid for Sonera. Although it comes in third in the league tables behind Morgan Stanley and Merrill Lynch, it has been involved in almost twice the number of deals during the year.
