Best bank – Banca Totta & Açores
Best debt house – Goldman Sachs
Best equity house – Merrill Lynch
Best domestic securities firm – BCP Investimento
Best M&A house – Banco Espírito Santo de Investimento
Best local partner – Finantia
Despite such apparently hair-raising schemes as giving away a free car with every mortgage, Banca Totta & Açores continues to go from strength to strength. While its rivals are suffering – Banca Comercial Português had to resort to a rights issue earlier this year – Totta’s business is growing rapidly, earning it this year’s award for best bank in Portugal. Its return on equity is around 19% – the highest of any Portuguese bank – and its cost-income ratio is just over 45%. Its investment bank makes a small profit, mainly in structured finance, and the bank serves as a distribution platform for bonds originated by its parent, Santander Central Hispano. It has a respectable-sized custody business that ranks fourth domestically in terms of turnover and manages around e4 billion of assets in mutual funds.
Goldman Sachs has done most of what little business there has been in the Portuguese debt markets this year. In June it was joint book-runner with CSFB on a e600 million five-year deal for BES finance, an arm of Banco Espírito Santo. Then, in December, it co-led a e500 million benchmark deal for EDP Finance, an arm of utility company Electricidade de Portugal. This deal was originally timed for the summer but when conditions turned stormy the company had to backtrack. All the same, it managed to get away a successful £200 million ($320 million) issue in August and relaunched its euro deal later in the year. Goldman also works with the Republic of Portugal and in March was a bookrunner on its e2.5 billion issue.
The Portuguese equity markets were even quieter over the past 12 months than in the quiet previous year. Only one significant deal came out of the country, a e930 million rights issue for Banco Comercial Português in February. Led by Merrill Lynch and UBS Warburg, it was also one of the few high-profile European transactions on which the US bank has been bookrunner this year. It still remains to be seem whether the capital increase – done at close to a 45% discount to BCP’s closing price – will be enough in the long term to dig the bank out of its hole. However, the banks involved did a good job selling BCP’s story to an international investor base, enabling it to bolster its tier 1 ratio to 5.4% from 4.2%. When it comes to trading Portuguese stocks, Merrill Lynch demonstrates its commitment by maintaining a consistent market share of around 14%.
Among the domestic equity brokerages, BCP Investimento, the best domestic securities house, enjoys a leading market share and it deployed this to the benefit of its parent on the rights issue, the largest public subscription offering ever made in Portugal aside from privatizations. BCP Investimento also leads the Portuguese firms in domestic debt capital markets, bond brokerage and asset-backed securities. It led the e200 million commercial paper programme for EDP signed in December and numerous smaller CP and FRN offerings for domestic corporates as well as structured MTNs. It has engineered credit, commodity, foreign exchange and interest rate linked debt products for distribution through BCP’s large retail network. It is the most active Portuguese bank in the securitization market, leading auto loan, consumer loan and residential mortgage backed deals in the past 12 months.
Banco Espírito Santo de Investimento has provided M&A advice to domestic companies and foreign firms doing business in Portugal. In February, for example, it advised Vodafone, along with Goldman Sachs, on its purchase of a 38% stake in Telecel Comunicãçoes Pessoai for e705 million. Before that, it had worked with Portugal Telecom on the divestment of its internet and yellow pages businesses. Outside of the telecoms industry, it was sole adviser to Galp Energie on its sale of 5% of Compania Logistica de Hidrocarburos in September.
Finantia has a reputation for its solid knowledge of Portuguese companies and its close relationship with the government, which enables it to undertake the most complex and politically sensitive transactions in the country. This year it advised on the acquisition by Australian mining company Murchison United of Somincor, an unquoted Portuguese company.
