Best bank – Standard Bank
Best Debt House – DrKW
Best equities House – Deutsche Bank
Best M&A House – UBS
Best local partner – Investec
The past year has been turbulent for banking in South Africa. Some banks went into receivership, some were rescued through acquisition and others decided to throw in the towel and gave up their banking licences. After the consolidation dust had settled, Standard Bank, Absa, Nedbank and FirstRand were left controlling 80% of the country’s banking assets between them.
Nedcor acquired BoE, FirstRand bought BoE’s mortgage business and acquired Sambou and Absa acquired the 40% it didn’t already own in Unifer. Standard Bank was the only one that didn’t make any acquisitions so, while the other three banks were focusing on getting their acquisitions bedded down, it emerged from the past 12 months as the shining star, taking the award for best bank. At the end of 2002 Standard’s headline earnings were up 19%, its return on equity was 20.3% and its cost-to-income ratio was at 57.3%.
Both DrKW and BarCap had a good year in South Africa in the debt markets. BarCap has been good in international and rand-denominated deals but not in syndicated loans. DrKW wins the award for best debt house for its stronger market share in international deals and syndicated loans.
BarCap and DrKW both acted as bookrunners on the two sovereign issues that fall into the 12-month period. BarCap acted as joint bookrunner with JPMorgan on the $1 billion sovereign issue in April last year and DrKW was joint bookrunner with Citigroup on the e1.25 billion sovereign issue in May this year. DrKW also advised Energy utility Eskom in its e200 million issue in October last year. In addition, the bank acted as joint arranged for a $130 million loan for South African steel company Iscor in June last year. There was also a $1 billion loan for the South African Reserve Bank in July 2002, a $225 million loan for Standard Bank in November and a $330 million loan for Absa bank in March 2003 that DrKW arranged.
It’s difficult to choose between Deutsche Bank and JPMorgan for the best equity house award this year. Based on international primary market activity, JPMorgan has the larger market share, having been involved in all three of the major deals in the 12-month period. There were two accelerated bookbuilds for Harmony Gold Mining company, one in April 2002 for $112 million and one in January this year for $124 million on which JPMorgan acted as sole bookrunner. The only other deal was the largest-ever South African IPO for national telecom operator Telkom at $525 million in March this year. JPMorgan and Deutsche Bank acted as joint bookrunners.
The award goes to Deutsche Bank again this year for the breadth and depth of its involvement in South African equities. While JPMorgan has good market share in secondary market activity at around 7% in 2002 and 10% in the first quarter this year Deutsche is more active, with a 15% share in 2002 and 14% for the first quarter of 2003. Deutsche is also stronger in equities research, sales, trading and warrants and has ranked number one in these areas in local and international surveys carried out in 2003.
UBS scoops the award again this year for best M&A house. It has the second-largest market share, with local player Nedbank doing well to top the league tables for the 12-month period. However, Nedbank’s position is boosted by the bank’s involvement in its own acquisition of BoE. UBS acted as joint adviser to BoE in the R8 billion ($1 billion) deal in April last year. In addition UBS advised BoE on its R11.9 billion sale of the NBS Home Loans mortgage book.
UBS also advised Telkom on its privatization and acted as co-lead manager in the government syndicate at the final stages of selling the shares. UBS wasn’t involved in the IPO because the government decided that it wanted to have separate banks advising the company and the government. The bank also acted as sole adviser to local packaging company Nampak in its R2 billion acquisition of Malbak.
UBS is currently advising Anglo Gold in its talks with gold mining company Ashanti Goldfields as well as advising Safika, an investment trusts holding company, in its proposed acquisition of a 25% stake in South African asset manager Stanlib.
Nedbank performed strongly in corporate finance this past year and Rand Merchant Bank advised Mvlaphanva in its acquisition of a 15% equity stake in Goldfields as well as advising ARM gold in its merger with Harmony Gold Mining. However, Investec Bank wins this year’s award for best local partner in South Africa for having advised on the most deals out of the local banks during the period.
