BEST BANK
Deutsche Bank
BEST DEBT HOUSE
Deutsche Bank
BEST EQUITY HOUSE
Morgan Stanley
BEST M&A HOUSE
Deutsche Bank
Some Euromoney awards for excellence effectively award themselves. In Germany, Deutsche Bank does more of just about everything, often arguably to a higher standard, than any other bank. Therefore, it is the best bank in Germany.
In the first quarter of this year, it fulfilled its ambition of a pre-tax return on equity of 25% in style – the figure went to 33%. At the end of March, DWS Investments had a 24.3% share of the German fund management market. It has been Standard & Poor’s best mutual fund in Germany 11 times in succession. Deutsche Bank Private & Business Clients (PBC)’s revenues and profits outstrip those of rival retail banks. PBC’s new business volumes grew by 77% in 2004, against a market average of 51%. PBC customers opened 300,000 new business accounts.
Deutsche is number one for new investment-grade debt issues and dominates the high-yield market. Its fixed income trading team continues to top Bundesbank league tables. Last year, the bank extended its loan exposure management group (LEMG) risk management and pricing practice to include loans to SMEs. It has launched new platforms in cash management and provides the largest German institutional custody service.
With the leading market share by number of issues and a strong deal list in several products and sectors, Deutsche Bank is this year’s best debt house in Germany. But is it the best positioned? At the time of writing, that attribute could well have been applied to Citigroup. Deutsche was bookrunner on debt issues worth just under $40 billion – around $9 billion more than Citigroup. And it also worked on more than 100 more bond deals and dominated the high-yield sector.
But Citigroup is looking as embedded in the German debt markets as any domestic bank. On consecutive days in June it announced a €500 million fixed-rate deal for the State of Berlin and priced Lanxess’s debut bond following its spin-off. This was not long after it had helped bring BASF’s €1.4 billion seven-year deal, which Citigroup shared with Deutsche and ABN Amro. Citigroup is working with issuers from local authorities to larger public sector clients such as KfW and leading corporates. And it doesn’t have to share deals with Deutsche any more. The Lanxess bond’s lead managers were Citigroup, HVB and JPMorgan. That shows some trust in the bank’s ability to do difficult deals.
The big story in 2005/06 may be Citigroup’s strategic positioning in new sectors. The bank was sole financier on the first big sale of German non-performing loans to Lone Star, lead financier on Terra Firma’s Viterra acquisition and co-financier on ThyssenKrupp’s €2.1 billion sale of its residential real estate business. If the RMB securitization and non-performing loan markets in Germany deliver on their huge potential soon, Citigroup could clean up. It’s going to take something special to take the best debt house title from Deutsche, but if anyone can do it, Citigroup can.
There are three leading equity houses in Germany, but Morgan Stanley just pipped JPMorgan and Deutsche Bank by deal volume in 2004/05 with an 18.7% share of the market, compared with JPMorgan’s 16.3% and Deutsche’s 16.2%. It is also the leading house, if equity-linked deals are included. Morgan Stanley was bookrunner on three of the five IPOs priced in the period under review, including the two largest German IPOs since 2001. In March, its relationship with media company Premiere and its main shareholder Permira involved the bank working on a €1.18 billion deal that was more than 12 times oversubscribed. It was also bookrunner on Postbank’s €2.6 billion concurrent IPO and exchangeable. This was an important deal for Germany in the second quarter of 2004, when investors were nervous, and needed clever structuring to make sure that Deutsche Post could hit its price target. Other than IPOs, Morgan Stanley was global coordinator of Lufthansa’s 750 million rights issue, successfully executed during a short window in the market, the Lanxess spin-off, and KfW’s sell-down of Deutsche Telekom and Deutsche Post.
Deutsche Bank advised on 26 German M&A deals in the period under review, more than any other bank. Among the highlights was its advice to Bayer on the €2.8 billion spin-off of Lanxess, and its mandate for Blackstone’s $5.9 billion acquisition of chemicals company Celanese. This was the largest ever German public-to-private deal, and the first under Germany’s amended takeover code. It was also the first dual jurisdiction tender offer in Germany and the US. In the financial sector, WestLB’s CEO, Thomas Fischer, praised Deutsche’s advice on the disposal of its one-third share in TUI above share price levels though a combined strategic sale and open market deal.
