North American regional awards
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Best Bank: Scotiabank |
As commodity prices remain volatile, fears persist about the supply of oil, and demand for natural resources such as metals increases, resource-rich Canada continues to attract growing international attention. The Canadian resources sector is booming, and the leading domestic financial services companies are enjoying the same increases in growth and profits. Scotiabank is leading in its results once again. This year, as the bank marks its 175th anniversary, Scotiabank reported a record first-quarter net income exceeding C$1 billion ($940 million) for the first time. Earnings per share were up 20% on the same period last year, and return on equity climbed to 23%, reaching the high end of the target.Because of strong mortgage growth and the acquisition of Maple Trust, a leading national mortgage company, Scotiabank’s average retail assets grew by 15% over the quarter domestically. Also on the domestic front, the bank invested in the first major expansion of its Canadian branch network since 1997, opening 15 new branches last year. It is planning to open another 35 over the course of this year.
As its international business develops, domestic banking is becoming a smaller contributor to the bottom line, diversifying the revenue streams. Domestic banking generated 36% of the bank’s net income over 2006, down from 42% the previous year. International banking and Scotia Capital, the wholesale banking business of the group, each generated 30% of the bank’s net income. Scotia Capital produced record results for the third year running over 2006.
In debt markets, maples (Canadian dollar denominated bonds brought to market by foreign issuers) are leading the way. From its inception three years ago, the market has been steadily growing, led by Canadian investor demand for new names for diversification, and issuer demand for a new investor base. In 2006, issuance reached $28 billion, and in the first five months of this year there has already been $23 billion-worth of issuance. Domestic corporate issuance and government issuance, on the other hand, has dried up somewhat. Asset-backed issuance this year looks unlikely to reach last year’s $80 billion. In the first five months, just $25 billion has been issued. Similarly, just $20 billion in government bonds has been issued, compared with 2006’s total of $64 billion.
In the maple market, RBC Capital Markets dominates and has been adding people to its debt origination and capital markets teams in Sydney, London and New York in part to cope with demand. Between April 2006 and March 2007, the bank led 33 maple deals for foreign issuers such as HBOS, Bear Stearns, Bank of America and JPMorgan. The firm has a market share of more than one-third in maples that is only contested by Merrill Lynch, which issued seven fewer deals and has a market share of 27.8%.
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Peter Godsoe, Scotiabank chairman and CEO: as the bank marks its 175th anniversary, it reported a record first-quarter net income exceeding C$1 billion ($940 million) for the first time |
In Canadian domestic corporate and ABS issues, RBC was lead manager on 78 deals, taking top place in the league table with a 20.1% market share. In domestic government issues, the story is the same. RBC has acted as lead manager on the largest number of deals, and has the largest market share with 20.9%. There appears to be no knocking RBC off its Canadian debt house perch. This is the third year that the bank has received the award for best debt house in Canada.
RBC Capital Markets has lost its mantle in equities to TD Securities this year, however. TD Securities has made significant strides in the domestic equity capital markets, and was the top-ranked equity underwriter for the year beginning April 1 2006. Its market share is 12.3%; BMO Capital Markets comes second with a 9.9% market share. TD Securities led some of the highest-profile offerings in the Canadian marketplace, and is the only bank to have acted as joint bookrunner on both the TransCanada Corporation and Fortis equity offerings, which were, respectively, the largest and second-largest fully paid bought deals in Canada ever. In IPOs, TD Securities was joint bookrunner on Air Canada’s C$525 million IPO in October and on North American Energy Partners’ C$255 million IPO in November. The firm is also a leader in the income trust market. Over the aforementioned period, the firm led 45 common equity and income trust equity offerings for proceeds of more than C$8.2 billion.
In M&A, RBC Capital Markets takes the award in Canada once again. It has a market share of 32% and advised on 34 deals with a Canadian target from the second quarter of 2006 to the second quarter of 2007. In total, RBC advised on 58 Canadian M&A transactions valued at more than C$70.27 billion, including the top-three Canadian target transactions. It was adviser to Canadian nickel producer Inco Limited on its C$21.77 billion sale to Brazil’s Companhia Vale do Rio Doce. It was a complex transaction because of its cross-border nature and the size of the two firms. Inco is the world’s second-largest nickel producer and CVRD is the world’s largest iron-ore producer. RBC also advised Trizec Canada and Trizec Properties on their C$9.72 billion sale to Brookfield Properties, creating one of North America’s largest landlords.
