Best bank – Bank of Tokyo-Mitsubishi
Best equity house – Nomura Securities
Best debt house – Nomura
Best M&A house – Morgan Stanley
Japan’s banks are still having a dreadful time. Despite government reform promises and plans to restructure the financial sector, nothing much is happening to improve their condition. Bank of Tokyo-Mitsubishi is, however, healthier than the rest and takes the best bank in Japan award. It is attempting to clean itself up and dispose of the non-performing loans that blight so many of its peers. Its balance sheet is getting stronger as it has reduced NPLs from 4.45% to 4.23% of total loans. It was also more profitable in its last financial year compared with 2001, reporting a profit of ¥950 billion ($8 billion) compared with ¥867 billion.
In the wholesale lending business the bank increased its loan book by about ¥1.2 trillion. BTM’s treasury business is viewed as extremely strong, winning Euromoney’s Tokyo forex poll and being named the best foreign exchange house in Japan. On the retail side BTM increased deposits by 17% and mortgage loans grew 10% on the previous year.
Nomura Securities is the leading equity house in Japan, having raised ¥1 trillion in capital in 88 deals. Its close competitor over the past couple of years, Nikko Salomon Smith Barney, raised ¥646 billion spread over 52 deals. Nomura was involved in some of the more high profile deals, including JR East’s ¥266 billion secondary offering in June last year; MTFG’s ¥313 billion follow-on offering in March; and Bank of China (Hong Kong)’s HK$22.4 billion IPO. In the latter deal Nomura can take a lot of credit for the success of the first ever China-related equity offering in Japan. Nomura was able to position the deal so strongly that Japanese investors took 50% of international demand.
Nomura is equally strong in debt. The list of blue-chip corporates that it did deals for this year is particularly impressive, including Toyota Motors, Dentsu, Ito Yokado, and NTT. Of the 48 deals worth over ¥50 billion, Nomura had a hand in 21, raising over ¥1.8 trillion. Overall, its market share was 24.8%, four percentage points more than second-placed Daiwa SMBC. It was also responsible for numerous zaito agency bond deals, doing deals for Japan Bank for International Cooperation, Development Bank of Japan and Japan Finance Corporation for Municipal Enterprises. Nomura also can lay claim to Japan’s first-ever zaito agency bond floating-rate note with an offering for Japan Highway Public Corporation.
There were only a few important M&A deals over the year but Morgan Stanley was more often than not involved in them and so takes the best M&A house award. It was party to 14 deals of $100 million or larger, with a combined publicly disclosed transaction value of $17.7 billion. It advised in several industry-defining transactions such as the merger of Kawasaki Steel Corporation and NKK Corporation, the demerger of Mitsubishi Motor’s truck business and DaimlerChrysler buying into Mitsubishi Motors. KSC’s $12 billion deal, one of the largest ever M&A deals in Japan, created the country’s second-largest steel company, with combined assets of over $40 billion and combined revenues of $25.9 billion. In the financial sector, Morgan Stanley is advising Aozora Bank on the sale of Softbank’s shares.
