Country Awards for Excellence 2017: Western Europe

© 2017 Euromoney

Regional awards

View full 2017 results

	Austria		Belgium		Cyprus		Denmark
	Finland		France		Germany		Greece
	Iceland		Ireland		Italy		Luxembourg
	Netherlands		Norway		Portugal		Spain
	Sweden		Switzerland		United Kingdom

Austria Best bank: Erste Bank Best investment bank: Raiffeisen Bank International

Austria’s best bank notched its best result to date last year on the back of a recovery in its emerging Europe operations. But while the group’s international network tended to grab the headlines, the domestic business also put in another strong showing. 

As Austria’s leading retail lender, Erste Bank was well-placed to benefit from a surge in household consumption on the back of reforms to income tax. The bank took full advantage of the opportunity, increasing new lending by nearly 10% and boosting its share of the retail market to 19%. Products allowing customers to lock in low interest rates proved particularly popular, while a new online consumer lending facility also gained traction. 

Erste’s net interest income was up by 3.3% from 2015. This was offset by declining fee and commission income, as well as rising deposit insurance contributions, hefty bank taxes and increasing IT costs. However, a 50% decrease in impairment charges, mainly on corporate loans, helped the bank post a net result of €228 million, giving a return on allocated capital of 19.3%. 

The awards period also saw further additions to George, the ground-breaking digital platform launched by Erste in 2015. In January, the bank became the first in Austria to offer account opening via video identification. Meanwhile, work continued on the revamp of Erste’s physical network in Austria, with the roll-out of a new branch concept combining advanced technology with enhanced advisory services.

Another lackluster year in Austrian investment banking saw low volumes matched by equally meagre fees. Leading domestic player Raiffeisen Bank International (RBI) responded to the challenge by taking a solution-based approach to clients’ financing and advisory needs, offering a combination of investment banking and loan products. The strategy has yielded strong results. 

In the awards period, RBI acted as bookrunner on 80% of bonds issued by Austrian corporates. The bank was also tapped to lead the Republic of Austria’s €5 billion dual-tranche deal in October that included the sovereign’s first 70-year bond, as well as an accelerated bookbuild of Erste Group shares in June that raised €392 million for seller Uniqa. 

Belgium Best bank: KBC Best investment bank: BNP Paribas Fortis

Belgium is, characteristically, the subject of influence from banks across its borders to the north and south. Lenders with regional success from France and the Netherlands have strong and thriving outposts in the country.

But an institution based in Brussels can claim leadership not just in Belgium but, by some metrics, regionally. With an exceptionally strong return on equity of 18%, KBC maintained an exemplary efficiency ratio of 55% in 2016 while its fully loaded common equity tier-1 ratio increased 100 basis points to 17.4%.

KBC is serious about technology; its digital redesigns and launches in the period included a mobile banking application for teenagers, that picked up 15,000 users in the six months after its launch, as well as new features for its online banking, insurance and investment services. (An app to report a car accident or house damage gained 45,000 users one year after its launch, for example.)

The year also saw KBC make its first big acquisition since the 2008 crisis, reaffirming its bank-insurance strategy in Belgium and Europe with the €610 million purchase of United Bulgaria Bank from National Bank of Greece.

The Belgian business of a French bank, BNP Paribas Fortis, is the best investment bank in the country, notching up good results in bonds, equities and advisory.

In debt capital markets, the firm was the country’s most prolific bookrunner, according to Dealogic, with a total of 26 deals during the awards period, from a sovereign bond of record-breaking size to smaller consumer-loan asset-backed securitization deals. The bank was also left lead on a €500 million eight-year term loan ‘B’ for local telecoms firm Telenet.

In equities, it was top of the league table by volume and led several convertible bond issues, including a €380 million deal in May 2016 for steel wire-products maker Bekaert to replace its €300 million 2018 convertible. It was also global coordinator on a tender offer by Groupe Bruxelles Lambert for bonds exchangeable into shares of Engie and led an €88 million rights issue for pharmaceutical firm Fagron.

In M&A, the number of deals on which it advised was second only to Rothschild (which hired the founders of the Belgian Leonardo & Co spin-off early in early 2016). These included the €312 million acquisition of Belgian assets from HeidelbergCement by Italy’s Cementir and the acquisition for around $100 billion of SAB Miller by AB InBev, which completed during the awards period.

Cyprus Best bank: Bank of Cyprus

The year following the end of Cyprus’ international bailout programme saw the continued rehabilitation of its banking sector. Liquidity eased further and the clean-up of loan books gathered pace, accompanied by economic growth and improvements in the country’s fiscal position.

The London listing in January this year of Bank of Cyprus, the country’s biggest and best bank, was another milestone in that process. In same month, the bank issued its first bond since 2013 , with a €250 million 10-year non-call five tier-2 deal. January 2017 also saw the bank complete the repayment of €11.4 billion of ECB emergency liquidity assistance, earning Irish CEO John Hourican public praise from finance minister Harris Georgiades.

Bank of Cyprus also stands out from its main rival, Hellenic Bank, in its profitability. It earned an encouraging €64 million in 2016. Its deposit base, too, continued to increase, growing 16% to $16.5 billion, while its common equity tier-1 ratio reached a solid 13.8%. Non-performing loans, still extraordinarily high at more than half of the book, nevertheless decreased by more than 20% thanks to a dedicated work-out division.

It didn’t ignore the future either. The bank launched its QuickPay mobile application for retail transfers and a new Premier Club for customers with deposits over €75,000. The Premier Club segment grew just as rapidly as its smaller deposit holders, only a few years after the bank’s unprecedented depositor bail-in in 2013.

Denmark Best bank: Danske Bank Best investment bank: Nordea

Denmark’s biggest lender, Danske Bank, also remains its best. It is living up to the stories about how successful Scandinavian banks can be. It earned a return on shareholders’ equity of 13.1% in 2016. This rose to 14.4% in the first quarter of 2017. 

Business volumes are growing, costs are falling and loan losses remain negligible: testament to the economic strength of its home markets and to a strategy that prioritizes efficiency. Outside Denmark, Danske’s businesses in the Nordic region, especially Norway and Sweden, are also growing. 

Danske’s net profit in 2016 increased by 12% on the previous year to DKr19.9 billion ($2.98 billion), and it was able to return almost half of that increase to shareholders. This continued in the first quarter of 2017 when profit increased by 12% over the same period in 2016. With a common equity tier-1 ratio of 16.3%, it has embarked on a share buy-back programme. Moody’s upgraded the bank’s long-term deposit rating from A2 to A1 in October.

Danske Bank also makes a good showing in investment banking, coming top of Dealogic’s debt capital market league table. However, across all products, the bigger regional bank, Nordea, remains Denmark’s best investment bank. Nordea, whose group head of corporate and investment banking is Mathias Leijon, is second to Danske Bank in Danish debt capital markets and was bookrunner on more deals than Danske. It is top of the equity capital market league table by both number and volume. Nordea also beat the other big local and international banks in M&A advisory, with a market share of almost 20%. 

Nordea’s most notable role was as joint global coordinator on the DKr19.7 billion IPO of offshore wind firm Dong Energy in June 2016. This was the largest ever IPO in Denmark and required careful communication, not least due to partial ownership by the state. Danske played a central part in Dong’s subsequent accelerated bookbuilds in January and February. Denmark and Nordea were again at the centre of European equity capital markets attention with the DKr18.1 billion IPO in September of payments firm Nets, a firm that also mandated Nordea for follow-on financings.

In M&A, Nordea advised NKT on its acquisition of HV Cable and helped arrange financing for that deal. In insurance, it advised Sampo on a mandatory offer for shares in Topdanmark, structuring and underwriting the attendant bridge facility. 

Finland Best bank: OP Best investment bank: Citi

Helsinki’s importance as a financial hub could soon get a dramatic boost if Scandinavia’s biggest bank, Nordea, goes ahead with a mooted move of its headquarters from Sweden to Finland.

But the country already has a locally based financial firm of which to be proud, OP, Finland’s best bank. Under president and CEO Reijo Karhinen, this cooperative group has proved it can adapt to the challenges of a changing European mutual-banking industry. It remodelled its internal ownership structure two years ago and is now embarking on a digitalization push to rival any in Scandinavia.

OP’s earnings before tax reached a record €1.14 billion in 2016, up €37 million on the previous year. Despite the challenging rate environment in the eurozone, net interest income increased, as did net fees and commissions. In 2016, assets under management in the wealth division grew by 9%, customer receivables by 4.5% and customer liabilities by 3.2%. Income before tax was up 4% to €295 million in the first quarter of 2017.

OP embarked on a new strategy in 2016 that includes targeting income streams outside the traditional boundaries of banking and finance, as well as spending €2 billion in digitalization of its businesses over the next five years. This got off to an encouraging start in 2016, when OP-mobile transactions exceeded the number of op.fi web transactions for the first time. It also launched contactless mobile payments under the Pivo brand. 

The bank is focusing on health and wellbeing as a fourth business line, alongside banking, non-life insurance and wealth management. Other initiatives include a new partnership that allows the installation of electric car-charging facilities near its branches.

In investment banking, the Scandinavian strengths of Citi – led by Nordic chairman Eirik Winter – are on full display in Finland, where it is the country’s best investment bank. Its work this year included the high-profile restructuring of a local mining concern Terrafame, helping it ramp up production after a Finnish government rescue through a €250 million recapitalization with investment from Trafigura and Sampo. 

Citi also advised on several divestments by Luvata, increasing interest by running individual sales processes for three newly separated divisions of the Finnish manufacturer, ultimately bringing in separate buyers from China, Japan and the US. Other highlights included advising Terex on its acquisition by Finland’s Konecranes, helping the latter stave off a bid by Chinese firm Zoomlion.

In capital markets, Citi was exclusive financial adviser on a €1.1 billion equity fund raising for a logistics platform set up by Nordic Real Estate Partners. Its prowess in debt financing is similarly strong, as seen in the Republic’s €4.5 billion dual-tranche bond offering, deals for the Nordic Investment Bank and Finnvera and bonds for corporates including Caruna, Sampo and Nokia.

France Best bank: BNP Paribas Best investment bank: Société Générale

France’s banks are doing better than many of their biggest eurozone peers, not least because of a greater degree of consolidation in the country. The big four banks all have much of which to be proud in their various retail and wholesale divisions, and none more so than BNP Paribas, France’s best bank, led by CEO Jean-Laurent Bonnafé.

France’s biggest bank by assets is also by far its biggest by market capitalization. It posted another good year of results, with rising revenues, lower loan losses and costs under control. Its pre-tax income rose 8% to €11.2 billion in 2016, with return on equity at a market-beating 9.3%. In 2017, pre-tax income rose again in the first quarter to €2.7 billion. The common equity tier-1 ratio rose to 11.6% during the period.

In its domestic markets, BNP Paribas’ leadership in digital banking, in particular, deserves to be acknowledged. The mobile banking platform it launched in 2013, Hello bank!, grew to 2.5 million clients and generated almost 10% of revenues from individual customers in 2016. This year also saw the merger of Wa! and Fivory to create a single mobile payments platform involving Carrefour, Crédit Mutuel, Auchan, MasterCard, Oney and Total. 

BNP Paribas’ corporate and institutional banking division chalked up important mandates even as it made €300 million of savings and cut €8.3 billion of risk-weighted assets. It remains one of the preeminent corporate banks globally in cash management and trade finance, particularly in Europe. It also retained the top spot in France in Euromoney’s private banking survey.

France’s investment banking sector remains as competitive as ever, with four strong local players competing against the ambitions of the US and fellow Europeans. France has been a focus for investment by Citi, for example, with several senior appointments in Paris.

Despite the competition Société Générale retains its leadership as France’s best investment bank. Although SocGen remains more committed to corporate and investment banking than many of its European peers, its financial results are strong, with return on equity rising to 11.9% in 2016, a 13% revenue increase and a 28% increase in profits. The bank is also pushing into France’s neighbours, most notably Germany.

SocGen’s leadership in French equity capital markets is particularly clear, with both the highest number and volume of deals, according to Dealogic. Its deals during the period include acting as joint global coordinator on the capital increase for Air Liquide, raising almost €3.2 billion. It also took global coordinator roles in the capital increases for Vallourec (€498 million) and Elis (€325 million) and in the IPOs of Maisons du Monde (€379 million) and Mediawan (€250 million).

In M&A, its deals ranged from technology to transport, including Wabtec’s €1.7 billion acquisition of Faiveley, a merger between FMC and Technip and Air Liquide’s acquisition of AirGas. It also advised on the privatization of the airport at Nice, selling to an Italian and French consortium.

SocGen’s bond deals during the period included a €6.2 billion multi-tranche deal for Danone, a €750 million hybrid for SES Global and mandates from Axa for senior unsecured and non-call perpetual debt. It acted on the first-ever green bond by a sovereign issuer, a €7 billion deal for the Republic of France. It was also sole global coordinator on a €687 million equivalent green-bond and liability-management exercise for Engie.

Germany Best bank: Commerzbank Best investment bank: Deutsche Bank

It was a torrid year for the German banking sector, with negative interest rates and intense local and international competition eating into already meagre margins. Things were made worse by the deepening crisis in shipping and fears over fines and litigation charges in the US. But, perhaps, it was also one in which the seeds for improvement had been sown. 

A new strategy late last year announced by Martin Zielke, CEO of Germany’s best bank, Commerzbank, is one seed that could bloom in the future. This is a step towards creating a stable, efficient and more profitable lender, focused on its strengths, particularly German consumer banking and fee-based products for small and medium-sized enterprises and smaller corporations. 

The bank is already benefiting from having restructured its business better than competitors in Germany. The deterioration in shipping, for example, vindicated its decision to ramp up shipping asset sales and exit shipping finance four years ago, even if it was a controversial decision for a bank tracing its origins to Hamburg.

Write-offs in parts of its business in the fourth quarter, although painful, were another decisive step towards reorienting its business for the future – cutting back in areas of investment banking where its competitive advantages are less evident. 

The increase in the bank’s common equity tier-1 ratio to 12.5% at the end of March from 12% a year earlier was also reassuring. Its NPL ratio remained low at just 1.5%.

Much of Commerzbank’s strategy is based on an effort to digitize more rapidly than competitors, especially back-office operations, as well as with new mobile apps, e-commerce platforms and an adapted branch network. 

Its private and small-business division is doing particularly well, with continued increases in numbers of customers and stable earnings.

First-quarter results in 2017 already point to an improvement; net profits rose to €217 million from €169 million in the same period last year.

Meanwhile, a settlement with US authorities over its dealing in mortgage-backed securities in December by Germany’s best investment bank, Deutsche Bank, was ultimately about half the $14 billion initially claimed. 

This too is a step towards clarity for the German banking sector; the subsequent €8 billion capital raising early this April was progress towards repairing the bank. “Thanks to a stronger balance sheet, we have the ability to increase business,” CEO John Cryan told employees after the capital raising.

If Cryan successfully resurrects Deutsche Bank’s European and global status as an investment bank in the coming years, the first sign of the recovery will be traced back to its home market, where it maintains an unrivalled breadth in its relationships with local clients. 

Deutsche retains a firm foothold on the German market, and momentum appeared in its favour towards the end of the period of these awards. 

This was evident in the €1.46 billion sale of 10.9% of Covestro by chemicals and pharmaceutical firm Mayer in late February, on which it was bookrunner alongside UBS; or (in the same sector in the same week) in its role as sole manager on an innovative €600 million bond with warrants for BASF.

Deutsche is still very firmly at the top of the bookrunner league table in the German debt capital markets, according to Dealogic. It was also bookrunner on more German equity capital markets issuance than any other bank during the period and a close second in the M&A advisory ranking. No other investment bank has such strong positions across products in Germany.

Greece Best bank: National Bank of Greece Best investment bank: Citi

Greece’s banking sector enjoyed a better year than the previous, as the economy returned to growth amid relative political stability. Nevertheless, relations with the country’s creditors remain strained. Many in the private sector are staking their hopes on elections in 2019 and a collapse in support for the far-left ruling party, Syriza. 

In the banking sector, much remains to be done. Above all banks need to reduce the crippling levels of non-performing loans, which are still close to half their total loan books. Reductions of NPLs is one of the ways in which National Bank of Greece (NBG) stands above its peers, helping it become many investors’ preferred Greek bank stock. It has the country’s lowest Texas ratio, perhaps the most important metric for Greek banks as a measure of non-performing exposures to capital.

In 2016, under CEO Leonidas Fragkiadakis, NBG’s core revenues held up and costs fell. The NPL ratio fell from 47% to 44% during the period, a pace of reduction that exceeded the targets set by the ECB. The liquidity position also improved, with a reduction in reliance on Eurosystem funding.

Perhaps most critical for NBG was the successful agreement and completion of sales of its international businesses during the period, including Finansbank in Turkey to Qatar National Bank, and the subsequent repayment of contingent convertible bonds (CoCos) to the Hellenic Financial Stability Fund. In December, the bank agreed the sale of United Bulgaria Bank to Belgium’s KBC for €610 million, in addition to smaller deals for Interlease and South African Bank of Athens. 

International banks have largely dismissed Greece as an investment-banking market. Citi, which remains Greece’s best investment bank, is different. Its leadership is barely contested in equity capital markets and M&A, and it remains one of the top debt capital markets banks in Greece, according to Dealogic. 

Citi has battled through the country’s airport privatization process and this is showing results with sales of regional airports to Fraport and Slentel. It has also helped banks and other companies raise capital by offloading assets either outside Greece or in non-core businesses such as real estate and hospitality assets. It raised equity and bond funding for clients in the oil, gas, cement and food industry. 

Citi’s commitment to Greece is reaping dividends. Its investment banking head for Greece and Cyprus, Theo Giatrakos, is a rising star at the firm.

Iceland Best bank: Arion Bank

Iceland, largely thanks to tourism, is boom land once again. GDP growth in 2016 reached 7% and capital controls were lifted in March. It is now a net creditor, with debt back to pre-crisis levels and a current account surplus.

The bank that best encapsulates the revival of the country’s economic fortunes is Arion Bank, Iceland’s best bank and the country’s only privately owned, systemically important lender. The week after the lifting of capital controls, Arion and its majority shareholder Kaupthing announced the purchase of a 30% stake in Arion Bank by four international investors: Taconic Capital, Och-Ziff Capital Management, Goldman Sachs International and Attestor Capital. 

The bank says the private placement is the largest equity portfolio investment in Icelandic history. It was an appropriate stamp of approval both in the country and the bank, coming only a couple of months after a €200 million tap brought its 2021 bond programme to €500 million. Published numbers suggest Arion is the most profitable bank in Iceland, too, with net earnings of IKr21.7 billion ($215 million) and a return on equity of 10.5% in 2016. 

This is an extraordinary transformation since the collapse of the Icelandic banking sector and the subsequent transfer of Kaupthing assets and liabilities to Arion in 2008. In 2010, at the time of the appointment of a new board and CEO, Höskuldur Ólafsson, only 25% of its loan book was to individuals. In 2016, this had risen to 47%. Problem loans have fallen from more than half the book to 1.6%. It has diversified its funding and increased lending by almost two thirds while doubling fee income. 

Restructuring Arion’s business mix has involved numerous sales of unrelated businesses and consolidating its financial services holdings, including card payments (Valitor) and fund management (Stefnir). It completed the acquisition of insurer Vördur in 2016.

Ireland Best bank: Allied Irish Banks Best investment bank: Citi

Brexit brought an unexpected hiccup to Ireland’s financial sector in 2016. The country’s economic and banking links to the UK suddenly became much less of an advantage over its eurozone peers. The hit to sterling immediately weakened the Irish banks’ earnings from the UK, which had looked like their most attractive growth avenue.

It is in that context that Allied Irish Banks (AIB) is the country’s best bank. AIB is lending into the Irish recovery. Personal, business and corporate lending all increased in 2016. It is now the biggest bank in terms of new mortgage lending and grew its Irish mortgage market share in the period. SME banking is also a focus, with a 48-hour approval programme for loans below €30,000 and a partnership with the Strategic Banking Corporation of Ireland to cut loan costs for its customers. AIB’s technology push made good advances in SME card payments and mobile banking.

Although lower than 2015, AIB’s €1.7 billion profit before tax remained decisively higher than its biggest rival Bank of Ireland, whose proportion of UK business is bigger. Partly thanks to write-backs, return on equity was also better at AIB at 11.1%. AIB’s fully loaded common equity tier-1 ratio, at 15.3%, was again higher than Bank of Ireland. Restructuring loans helped reduce AIB’s impaired book by €4 billion. In July, it repaid €1.8 billion to the state. 

AIB awarded a €250 million dividend last year while Bank of Ireland’s pension deficit prevented it from doing the same. CEO Bernard Byrne successfully completed a London and Dublin IPO at the end of June, which gave AIB a healthy valuation of around €12 billion.

Ireland is one of the lesser-known investment banking markets where Citi occupies a dominant position. Citi’s operation in Dublin covers 300 clients ranging from Irish corporations and multinationals to financial institutions and state firms. Its European aviation leasing business is also based in Ireland.

Citi’s bond deals this year included issuance of senior and payment-in-kind notes by Ardagh – one of a series of mandates for the Irish packaging firm, which included acting as sole financial adviser on a $3.4 billion purchase of beverage can assets from merging US and UK manufacturers Ball and Rexam. Citi also acted on an inaugural asset-backed securitization transaction for Elix Aviation Capital, as well as bonds for Ryanair and another packaging firm, Smurfit Kappa. It was joint bookrunner on Permanent TSB’s €500 million Irish mortgage securitization. 

In equity capital markets, although Irish deals were thin on the ground, Citi was joint bookrunning manager on Ardagh’s $308 million New York IPO. It was joint broker on €525 million of Ryanair’s €800 million share buy-back programme.

Italy Best bank: UniCredit Best investment bank: UBS

Milan’s bankers might begin their summer holidays this year with a feeling that though their challenges are still great, they are not insurmountable. It should be a considerably more satisfying break than last year.

That is largely thanks to the dramatic turnaround in sentiment towards its biggest and best bank, UniCredit. Jean Pierre Mustier’s appointment as CEO last summer was followed by a series of decisive asset sales, including its asset management arm Pioneer and its Polish bank, Pekao. Months of preparation culminated in an investor day in London in mid-December at which Mustier unveiled a €13 billion rights issue, further cost cuts and a €17.7 billion non-performing loan securitization deal with Fortress and Pimco.

Signs of a turnaround were already evident in first-quarter results; profits are up 40% to €907 million, thanks to non-core disposals, higher revenues and lower costs.

Yet the achievements of the last year go far beyond the sum of capital raised and non-performing exposures cut. Mustier is pushing for a fundamental shift in culture, symbolized by selling the CEO’s private jet, flying in economy class and voluntarily cutting his own pay by 40%. This is important for morale at a time of so many job losses, but it has helped convince investors too that its longer-term prospects really have improved.

A change in culture is also evident, for example, in corporate governance, as the number of vice-chairmen is cut from three to one. The capital raising has led to a more mainstream investor base: more professional money managers in the US, and fewer of its sometimes-troubled shareholders from Italy and the Middle East.

This should unleash the latent advantages of UniCredit’s banking talent and its pan-European strengths. For example, UniCredit is in the top 10 European retail banks in a recent ranking of digital prowess by Autonomous Research – far ahead of local rival Intesa Sanpaolo. Although Mustier has sold stakes in the Italian direct multichannel bank, Fineco, his team has also overseen the preparation and subsequent launch of Apple Pay and Alipay for Italian customers.

The urgent need to fix the capital shortages in Italian finance naturally gave an advantage to investment banks with a strong understanding of the complexities of both Italy and banks. One such firm is UBS, whose investment bank president Andrea Orcel is an Italian financial institutions specialist, and whose CEO, Sergio Ermotti, is Swiss-Italian and himself a former UniCredit banker. (Orcel also counts Emilio Greco, another Italian financial institutions-focused banker, among his colleagues as a fellow Bank of America Merrill Lynch alumnus.)

UBS was a key adviser to UniCredit as it successfully turned around its equity story over the year. It advised UniCredit on the Pekao sale and was joint global coordinator on the sell-down of shares in Finecobank through two accelerated bookbuilding processes. It has also helped the bank raise debt in the capital markets, including acting as sole international lead manager on a €500 million additional tier 1 private placement in December. Finally, it was joint global coordinator on the rights issue in February.

This was, however, by no means the only set of achievements during the year in UBS’ Italian investment banking business, particularly in financial institutions. It was exclusive financial adviser to Intesa Sanpaolo on its €1 billion sale of Satefi and ISP Card to Advent, Bain Capital and Clessidra, for example. Also in payments, it acted as sole financial adviser to Poste Italiane on its acquisition of an indirect 15% stake in SIA from Cassa Depositi e Prestiti. 

Luxembourg Best bank: BGL BNP Paribas

Growth in Luxembourg continues to outpace that of its neighbours – and the local unit of the biggest bank in the neighbourhood, BGL BNP Paribas, continues to outshine its peers.

Net profit rose 13% to €403 million in 2016 at BGL BNP Paribas. Maintaining a tight lid on costs and credit quality in a challenging interest rate environment, the bank recorded rises in loans and deposits across its retail and corporate business, and inflows in its wealth management division. Other group-wide BNP Paribas businesses, such as cash management, also put the Luxembourg bank in a strong position.

The year saw BGL BNP Paribas sign a new €40 million agreement with the European Investment Fund (EIF) to provide loans at attractive rates for innovative small and medium-sized business customers. It also worked alongside the EIF and others to launch a new microfinance institution, which it says is the country’s first, improving access to credit for borrowers shut out of mainstream borrowing, including social enterprises.

Netherlands Best bank: ING Best investment bank: ABN Amro

The Dutch banking sector’s restructuring is far ahead of most of the rest of the eurozone, including northern Europe. As in Scandinavia, the Dutch sector benefits from its high degree of consolidation.

After 2015, in which the IPO of another dramatically transformed bank, ABN Amro, stole the limelight, ING returns as the country’s best bank. The bank’s net profit grew by 17.9% in 2016 to just under €5 billion, more than its two main Dutch rivals combined. Underlying return on equity rose to 11.6% from 10.8% a year earlier. CEO Ralph Hamers was able to point to further momentum in the first quarter of 2017 with an underlying pre-tax result of €1.65 million, up by more than a third on the previous year. 

ING’s net core lending growth reached €34.8 billion and net customer deposit inflows reached €28.5 billion in 2016. Fully loaded common equity tier 1 continued to rise in 2016 and early 2017, reaching 14.5% at the end of March this year.

ING’s prowess in retail banking is acknowledged around the world, largely due to its leadership in the use of digital technology. The retail segment made further strides this year with an increase in its global customers of 1.4 million to 35.8 million and an 8% increase in the number of primary bank customers, to 9.7 million. It is further developing its digital financial advisory platform and is a partner with more than 65 fintech startups. 

The bank saw particularly strong loan growth in wholesale banking, where it is also pushing hard to deploy new technology in trade finance and cash management, including commodities – for example, helping to complete what it says is the first large oil trade using blockchain.

The Dutch financial community remains heartened to see the gradual return of another kind of national champion in ABN Amro, the country’s best investment bank. ABN Amro is gradually increasing its presence in the European markets around the Netherlands. This year it was the only Dutch bank to lead the IPO of ASR, the Dutch state-owned insurance company, on which it acted as joint global coordinator.

As well as growing its market share in Dutch debt capital markets, it acted in joint global coordinator roles on IPOs including the €118 million issue of Sif, in the renewable energy manufacturing sector, and in accelerated bookbuilds such as the €110 million transaction for soft-drinks bottler Refresco.

ABN Amro’s M&A capabilities were shown in its role as sole financial adviser to HAL Investments on its €830 million sale of hearing aid retailer AudioNova to Switzerland’s Sonova. Its work on the successful defence of PostNL against Belgium’s Bpost’s €2.3 billion public offer again saw it act in something of a national champion role. Towards the end of the awards period, in the utilities sector, it advised Stedin Group on the acquisition of Delta Netwerkgroep.

Norway Best bank: DNB Best investment bank: Carnegie

The respite in the oil-price pinch brought some relief to Norway’s banking sector. Stress in the oil industry has inevitably led to higher loan losses at Norway’s biggest and best bank, DNB. Nevertheless, investors are increasingly convinced that the wind is in DNB’s sails, and its share price rose by around a third during the period. DNB reached a common equity tier-1 ratio of 16% a year ahead of schedule in 2016 and increased dividend payments in line with its targets. Return on equity looked good by European standards at 10.1%.

Its cost-to-income ratio is still barely above 40% despite the higher loan losses, and the first half of 2016 saw a dramatic fall in the number of DNB’s Norway offices from 116 to 57 as it says branches are becoming less important. The use of its online and mobile banking channels has risen sharply. 

DNB is now one of the most branch-efficient retail banks in Europe and one of its most digitally advanced, as shown by the continued development of its Vipps payment platform, launched for the SME market and adding the Vipps Invoice service in 2016. 

Norway’s investment banking market also has much of interest, including the growth of pan-Scandinavian firm Carnegie. Its award as Norway’s best investment bank reflects one of the largest investment banking teams in Oslo, one that counts many blue-chips in its diverse client base. 

Carnegie’s position in the Norwegian equity capital markets and among private equity sponsors is particularly strong, as shown by the NKr2.1 billion ($247 million) IPO of consumer goods company Arcus by Swedish private equity firm Ratos, as well as an array of other share sales from renewable energy firms to biometrics.

The firm also had a number of important M&A advisory mandates during the period. These included a NKr1.2 billion share divestment in Skandiabanken by Skandia; the NKr2.9 billion acquisition of plant retailer Platasjen by Ratos; the $575 million divestment of Opera Software’s consumer business to Chinese firm Golden Brick; and the NKr1.2 billion sale by Norwegian oil services firm Akastor of Fjords Processing to US buyer National Oilwell Varco.

Portugal Best bank: Santander Totta Best investment bank: CaixaBI

Although growth in Portugal is slowly improving, largely thanks to a boom in the tourism industry, the banking sector often hit the headlines for the wrong reasons over the last year. Nevertheless, by the end of the awards period, there was greater confidence in the industry as international capital began to support the ailing balance sheets of some of the country’s biggest banks.

CaixaBank’s increase in its stake in BPI to a majority holding could bring a stronger competitor into the market in the longer term. However, Santander Totta is Portugal’s best bank for yet another year. The Spanish-owned lender is still well ahead of its peers in the most important metrics of profitability and capital, and is among the best in terms of asset quality. Unsurprisingly, its credit ratings are still way ahead of its rivals.

Santander Totta’s net income increased by more than a third to €395 million in 2016, and it posted strong growth in mortgages and SMEs. It also saw its number of digital customers grow by about a third and integrated the assets and liabilities of Madeira-based Banco Banif. With a common equity tier-1 ratio of 15.7%, Santander Totta ended 2016 with a return on equity of 11.1%, a strong result anywhere in Europe and especially so in Portugal.

Portugal’s investment banking market, sometimes neglected by some of the world’s biggest firms, is nevertheless well-served by more specialized institutions. The preeminent among these is the investment-banking arm of the country’s biggest bank, Caixa Geral de Depósitos; an institution that now holds added importance for the country as international ownership of rival banks has increased.

Portugal’s best investment bank, CaixaBI, has unrivalled strength across all products in Dealogic league tables and above all in debt capital markets. Naturally, it is a committed investment bank for the sovereign and key utility companies. The year saw it act as joint global coordinator on an inaugural €750 million retail bond from the Republic of Portugal, a format the issuer chose to replicate with bigger deals later in the year.

It continued its strong activity in the privately placed bond market, leading 13 such deals for the Altri Group, The Navigator Company, Galp Energia, Semapa, Sonae Group, Efanor and others. It also raised capital from retail investors in a €60 million bond for football club Benfica and helped structure asset-backed financing in the electricity and telecommunications sector.

Spain Best bank: CaixaBank Best investment bank: Bank of America Merrill Lynch

It was a topsy-turvy year for Spanish bank stocks, as the spring and summer of 2016 left their stocks languishing in the spill-over in negative sentiment from the Italian and Portuguese banking sector. A changed outlook for global and then eurozone rates and the formation of a working parliamentary majority by prime minister Mariano Rajoy combined to boost confidence in this especially rate-sensitive banking sector.

It was also a particularly eventful and successful year for CaixaBank, Spain’s best bank, whose CEO is former Morgan Stanley banker Gonzalo Gortázar. Although less internationally diversified than its main rivals, CaixaBank’s results compare favourably with the Spanish operations of BBVA and Santander. Importantly, given the pinch on interest margins, its recurring cost base fell by 1.7% partly thanks to synergies from its 2015 acquisition of the Spanish business of Barclays.

CaixaBank’s net income rose to more than €1 billion in 2016, up almost a third on a year earlier, and recurring net operating income also rose. Despite the impact of negative rates on Spain’s predominantly Euribor-indexed mortgages, CaixaBank has managed to grow fee income from mutual funds, pension plans and insurance premiums and distribution. Its real estate subsidiary generated €1.8 billion in sales and rentals, as its bad-debt pile fell another percentage point in 2016.

Independent surveys rank CaixaBank among Europe’s top digital banks. Its mobile banking platform, Caixa Móvil, handles billions of transactions. This is in addition to the mobile-only bank, imaginBank, that CaixaBank launched in January 2016, which reached 90,000 clients a year later. 

One of the biggest developments at CaixaBank in the period was a breakthrough in its long-running battle to remove a cap on voting rights on its holding in Portugal’s BPI. This allowed the firm to increase its stake to 84.51% in March and gain control of BPI after a €1.3 billion placement of treasury stocks late last year. During the awards period there was also an agreement to reduce to a minority holding in CaixaBank by unlisted investment company CriteriaCaixa (carried out in stages) and the arrival of a new chairman, Jordi Gual.

But watch out. The financial results at Santander have consistently beaten analysts’ expectations of late and its domestic results are improving. It is making a renewed effort to attract Spanish millennials with the 123 Smart account and its digital banking initiatives are increasingly focused on Spain. Santander’s acquisition of Banco Popular, although not without challenges, will see it overtake CaixaBank in terms of the size of its domestic operations. 

Activity in the financial sector brought in revenues for international players, notably Bank of America Merrill Lynch, Spain’s best investment bank. As well as work for CaixaBank and CriteriaCaixa, BAML acted as financial adviser to Santander with the other controlling entities on the disposal of Allfunds Bank for €1.8 billion. It also advised on the sale of Barclaycard’s Spain and Portugal business to Värde Partners.

In other important sectors in Spain, such as renewable energy, BAML advised on the sale of Vela Energy to Sonnedix – a deal it coupled with the issuance of a €404 million solar-power project bond by Vela. The firm was involved in advisory work in telecoms, hospitality, real estate and retail. In healthcare, it advised Quiron Salud in that firm’s sale to Germany’s Fresenius for €5.8 billion. 

In equity capital markets, BAML took a leading role in many of the biggest and most important deals of the year. It was sole bookrunner on the secondary placement of 1.5% of Telefonica’s stake in China Unicom for $364 million; a firm it also helped with a €1 billion hybrid bond. Its debt capital markets work included a €1 billion green bond for Iberdrola and senior issuance for firms such as Ferrovial, Gestamp and Codere, the latter as part of a restructuring agreement.

Sweden Best bank: Swedbank Best investment bank: SEB

The top European banks measured by return on equity are almost all Scandinavian, and most of these are Swedish. They have set the standard for how to adapt to a changed market and a model for CEOs looking to make their institutions attractive to investors.

Even by Swedish standards, Swedbank posts exceptionally strong results. It did especially well over the past year, making a seamless transition after the appointment of Birgitte Bonnesen to replace Michael Wolf as CEO and the election of a new chairman, Lars Idermark. Profit for the year rose by around 25% to SKr19.5 billion ($2.23 billion) and its return on equity was 15.8%.

Its success over the last year is in large part due to good credit quality and volume growth (particularly in Swedish mortgages), which boosted net interest income despite low rates. It is also thanks to a particularly good efficiency ratio, which fell below 40% in the year, despite increased compensation at the network savings banks. The digitization of the bank also continued as changes to the group executive committee included the creation of a new digital banking unit, shortly after a beta version of its new website was launched.

These positive trends continued in the first quarter as profit rose 20% to SKr5.1 billion and the common equity tier-1 ratio remained extraordinarily high at 24.2%, 50bp higher than the previous year, despite its generous dividend policy.

Sweden’s best investment bank this year is SEB, which posted excellent results across the debt and equity capital markets and M&A. It advised on more M&A deals than any other bank and notched up a 38% M&A market share in Sweden, according to Dealogic. These included acting on the Swedish side of the year’s biggest M&A deal, US pharmaceutical firm Mylan’s $7.2 billion takeover of Meda, as well as smaller deals in manufacturing, oil and gas, real estate and others.

SEB was also one of the top equity and debt capital markets banks, bookrunning a total of 18 equity deals, according to Dealogic, including the SKr4.1 billion IPO of financials group Resurs Holding. Its debt capital markets mandates ranged from big sovereign deals to more technical subordinated structures.

Switzerland Best bank: UBS Best investment bank: UBS

It has not been the easiest of years for Swiss banks, with the continued pinch on wealth-management margins and regulatory challenges such as the new rules on banking secrecy. Nevertheless, the country’s biggest banks are generally well regarded by investors because of their lower reliance on net interest income. 

By far the largest bank by market capitalization, UBS is also an outlier in terms of its profitability in comparison with other big banks both in Switzerland and neighbouring countries.

Sergio Ermotti, UBS’s longest-serving CEO, can point to particularly strong first-quarter results with a net profit of SFr1.3 billion ($1.33 billion). The results came as a strong indication that UBS, unlike many of its rivals, is able to earn its cost of capital, as return on tangible equity reached 12.6%, thanks to a jump in earnings from wealth management and investment banking. Its common equity tier-1 ratio is also stronger than most global peers at 14.1% at the end of the first quarter.

In Switzerland, the biggest contributor to UBS’ group profits, costs and revenues remained exemplary in 2016 as a cost-to-income ratio of 55% (and another year of healthy growth in new business volumes in personal and corporate banking) led to record profits. Martin Blessing, Commerzbank’s former CEO, was appointed head of UBS Switzerland last year.

In the digital arena, UBS is a force in Switzerland, with initiatives such as video identification for opening accounts online and the launch of trade-finance execution using blockchain, as well as an array of schemes demonstrating technological leadership in the wealth management, sales and trading and risk management. 

UBS’s investment banking strategy of focusing more on profit than revenues is also paying off. In Switzerland, the bank has around 240 front-office staff, covering advisory, capital markets, research, and sales and trading. The vast majority of the largest Swiss corporates are clients of UBS.

It was a particularly good year for UBS in equity capital markets in Switzerland, where it leapfrogged Credit Suisse and rose to first in Dealogic’s league table. It was joint global coordinator on the SFr641 million IPO of vacuum valve group VAT. In pharmaceuticals, it was also financial adviser to Lonza on its $5.5 billion all-cash acquisition of Capsugel from KKR and coordinated the $6.2 billion financing.

UBS’s other deals during the period include acting as sole adviser to HNA on the SFr1.9 billion takeover of travel hospitality firm gategroup. The largest-ever Swiss public takeover deal was reaching completion by the end of the awards period – ChemChina’s $45 billion acquisition of Syngenta. UBS advised the Swiss side, including a defence against a less attractive offer by Monsanto.

United Kingdom Best bank: Lloyds Banking Group Best investment bank: Barclays

The UK banking sector in mid 2017 seems like the opening of Charles Dickens’ ‘Tale of Two Cities’: the best of times and the worst of times. Many of the longest-suffering banks are approaching the end of their painful post-crisis restructurings, while a 2019 deadline for complaints against mis-sold payment protection insurance gets closer. At the same time, the risk of a messy Brexit increases.

One bank that has already closed the post-2008 chapter is Lloyds Banking Group, which returned to full private ownership in May after a series of market sell-downs facilitated by a premium to book value and expectations of market-beating returns well above cost of equity. The UK taxpayer has ended up making a profit on the £20.3 billion ($25.9 billion) it ploughed into the group during the financial crisis.

With the tentative recovery of rivals and the ever-growing strength of Santander UK, Lloyds Banking Group cannot rest on its laurels. But its results in 2016 and early 2017 were demonstrative of a bank with momentum. Partly thanks to a higher net interest margin, the group more than doubled statutory profit in 2016, enabling it to increase its dividend and triggering a sharp uptick in its share price when the results were announced. The pre-dividend common equity tier-1 ratio rose from 13% to 14.9% in 2016.

Its cost-to-income ratio is also better than peers at less than 50%, and it is placing even more focus on digital banking. Underlying return on tangible equity rose to 14.1% in 2016 and the trend continued in the first quarter when profit doubled to £1.3 billion.

Brexit has put a dampener on the UK’s continent-leading investment banking market, and the country’s European share of equity capital markets volumes has fallen. 

Nevertheless, a home-grown institution is battling off the advance of the Americans in London, winning seven corporate broking mandates during the period, bringing its total to 52 companies, including 21 FTSE100 clients, at the end of the awards period. The UK’s best investment bank is Barclays, led by UK investment banking head Alisdair Gayne, whose team can boast strong positions in the debt and equity capital markets and M&A in Dealogic’s UK league tables for the period.

The bank dominates DCM in the UK alongside HSBC. Issuers turned to Barclays first after Brexit, with British American Tobacco’s £50 million bond the first sterling deal after the vote. It followed up with an £800 million 33-year bond for Vodafone and a subsequent £1 billion 40-year deal. Barclays also spearheaded what it says is the largest-ever sterling deal at £3 billion for National Grid Gas, part of a wider capital restructuring and liability management exercise. Other notable deals included Santander UK’s £500 million additional tier issuance.

In ECM, Barclays was joint global coordinator on a £721 million rights issue for Informa to support its £1.2 billion acquisition of Penton Information Service, on which Barclays also acted as financial adviser. It was also joint global coordinator on Tullow Oil’s £607 million rights issue and on the $75 million IPO of Ocelot Partners, a special purpose acquisition vehicle focused on the technology, media and telecommunications sector.

The firm’s focus on smaller clients was reflected in 12 block trades in mid-cap companies, including a £124 million placing in JRP after the merger of Just Retirement and Partnership a year earlier, on which Barclays acted as financial adviser. Its equity-linked trades during the year included a £400 million non-dilutive convertible bond for BP, as well as a similar deal for Tullow.