Best bank – íslandsbanki
Best debt house – Búnadarbanki
Best equity house – Kaupthing
Best M&A house – Kaupthing
Best local partner – Búnadarbanki
Iceland is heavily overbanked, with a handful of commercial banks and 24 small savings banks. In May a merger between Búnadarbanki and Kaupthing was approved, creating the country’s biggest bank and there is still more scope for consolidation. Because Búnadarbanki and Kaupthing operated as individual institutions during the past year, in making awards Euromoney has had to consider the performance of the individual entities.
The major banks then are íslandsbanki, Landsbanki, Búnadarbanki and Kaupthing. However, Kaupthing is a pure investment bank, while the other three are all-round banking institutions. Of the three, íslandsbanki is still the one to beat and wins the best bank award. It has been the most innovative bank over the past 12 months, has the best credit rating, has the lowest cost-income ratio at 54.8% and has seen top returns. Búnadarbanki and íslandsbanki both posted return on investment of 18.2% at the end of 2002, compared with 13.5% for Landsbanki. íslandsbanki also has the largest market share in total banking sector assets at 26%, the highest share of total loans at 21% and the third-largest share of deposits at 20%.
Búnadarbanki wins the award for best debt house again this year. Government issues dominate the bond market and Kaupthing has the biggest share of that market with around 34%. Búnadarbanki comes in next with around 20%. Búnadarbanki has also been highly aggressive in the less developed corporate bond market during the past 12 months and has by far the largest share.
The award for best equity house goes to Kaupthing again this year. There have been no initial public offers and little primary market activity. However, of the deals that did take place, Kaupthing had the largest market share. The deals it was involved in include a $7 million private placement for Icelandic venture fund Uppspretta, a tender offer for Icelandic real-estate company Stodir for a 7% stake in Baugur and two block trades – one for $40 million and one for $44 million. Kaupthing also advised Icelandic prosthetics company Ossur in the block sale of 15% of its shares to Swedish Industrivarden in the largest single sale of shares in an Icelandic company. The bank also has the top market share on the Icelandic stock exchange.
Búnadarbanki has made great strides in M&A over the past 12 months but Kaupthing has continued to dominate and takes the award for best M&A house. The biggest transaction during the period was the merger between Búnadarbanki and Kaupthing in May 2003 with a transaction size of IKr60 billion ($790 million) in which both banks were involved.
Kaupthing also acted as co-adviser with Deutsche Bank to Icelandic retail company Baugur on its attempted acquisition of UK retailer Arcadia and subsequent sale of its 20% stake in Arcadia to Philip Green. In August last year the bank advised Icelandic sleep diagnostics company FlagaMedical on its acquisition of American sleep diagnostics company MedCare with a deal size of $15 million. Kaupthing also advised Icelandic investors on their acquisition of Danish salted-fish processor Jeka Fish in January this year.
Búnadarbanki wins the award for best local partner. It has made big strides in M&A during the past year, coming from nowhere to pose a serious threat to Kaupthing. The bank advised on Pharmaco’s acquisition of Delta, with a deal size of IKr17 billion, the largest corporate finance deal in Iceland during the period and the second largest in the country’s history. Now that the two banks have merged they should be leaps and bounds ahead of anyone else.
