Euromoney Awards for Excellence 2006
USA I Canada
|
BEST BANK: Scotiabank BEST DEBT HOUSE: RBC Capital Markets BEST EQUITY HOUSE: RBC Capital Markets BEST M&A HOUSE: RBC Capital Markets |
In what many critics argue is declining business in a mature market, Scotiabank has continued to show that you can still make a decent return from full-service high street banking – and grow profitability ratios at impressive double-digit rates. Net income last year hit an all-time record high of C$3.2 billion (US$2.85 billion), up 10% on 2004. Earnings per share increased by nearly 12% and return on equity was 21% overall with the retail division – a notoriously high-cost low-margin business in G5 economies – achieving an ROE of 31%. Over the past 10 years, annual return to shareholders has averaged 23%, with a near 30% share price appreciation in the past 12 months. While domestic banking, conducted through Scotiabank’s 954 retails outlets, accounted for 42% of total net income, international operations spread across some 40 countries generated 27% and institutional capital markets and investment banking accounted for 32%. Among other big-ticket deals, Scotia Capital acted as exclusive financial adviser to Kohlberg, Kravis & Roberts on its US$3.2 billion purchase of Masonite International Corporation.
No other bank in Canada has ridden the wave of the rebounding domestic economy and strengthening global financial services sector more aggressively than RBC, the largest company in Canada and by a significant margin the largest debt issuer, equity issuer, and M&A adviser. RBC was rated through a series of independent assessments by KPMG as Canada’s most respected corporation as well as the nation’s most valuable brand – an impressive achievement considering that most Americans down south in the 48 states trust Wall Street banks about as far as they can throw them. In equity capital markets, RBC played a part in almost every single big deal of the year, many of which would have been trophy transactions for even the largest global equity houses.
In July 2005, RBC was the lead manger for the C$288 million IPO of the Aeroplan loyalty programme, a business unit arising out of the restructuring of Air Canada. Although there are many loyalty marketing businesses in the world contained within larger corporates, typically airlines, Aeroplan was the very first pure play equity IPO on the concept and required the structuring of a highly complex deal. Other headline deals included the US$288 million IPO of ACE Aviation, the US$235 million IPO of the Jazz income fund (linked to a regional airline), the US$410 million IPO of Addaz Petroleum, a Swiss-based corporate with its operations in Nigeria, and the US$700 million IPO of the Deranet Income Trust, the privatization of the electronic Ontario land registry system. Perhaps the most newsworthy deal was RBC’s US$900 million IPO of Tim Horton, the national doughnut chain. Horton, originally owned by Wendy’s, is nothing short of a national icon in Canada similar to Marks & Spencer in the UK.
The global reach of RBC, whose London trading room is actually larger than its main trading room in its Toronto headquarters, has supported its position as the top underwriter in fixed income. With some 27% of total market share, RBC managed more than C$37.4 billion in debt issues – more than double the volume of the second-placed debt house, CIBC. In maple bonds (Canadian dollar denominated debt originated from foreign corporates and sold to Canadian domestic investors), RBC holds a 36% market share. Starting from near zero issuance just a few years ago, total outstanding value of the maple market hit C$20 billion last year and is expected to surpass C$30 billion in 2006. RBC also acted as joint book runner for the entire Canada Mortgage Bond issuance programme, involving four transactions totalling C$18 billion.
In Canadian M&A, following the fall from grace of Merrill Lynch and Goldman Sachs, the two lead arrangers last year now well down the list, RBC topped the tables with a near 20% market share, edging out its nearest rival, CIBC, which accounted for 15%. Notable RBC-advised M&A deals included the US$14.6 billion acquisition of Falconbridge by Inco, as well as the US$10.1 billion acquisition of Placer Dome by Barrick Gold Corp. RBC acted as the adviser to both Inco and Barrick.
