World’s best bank for financial institutions 2017: Goldman Sachs

Awards for Excellence 2017

There are few sectors in which the demands of clients vary as markedly as they do in FIG. The world’s best FIG bank needs to be proficient not only in equity raisings and M&A but arguably even more importantly in capital repair and complex balance sheet solutions. This year’s winner, Goldman Sachs, is just that. 

There is no doubt that it is the strength of Goldman’s FIG advisory offering that is at the root of its success. Last year’s winner in the FIG category, Citi, has a vast suite of offerings, from balance-sheet lending to advisory and transaction services. By contrast, Goldman has managed to be involved in every important recapitalization and restructuring of a financial institution in Europe in the last 12 months primarily on the strength of its creative advice.

“This is reflective of our franchise,” says Todd Leland, London-based global co-head of FIG for Goldman with Luke Sarsfield in New York. Sarsfield took up the role in January this year when Mike Esposito became chairman of the global FIG group. 

“We don’t always lead with balance sheet, and this is evidence of the scope of our footprint,” Leland says. “As a firm, we focus on things that are franchise-enhancing.”  

Goldman’s advisory prowess has shown through on the asset-management side. It was lead financial adviser to Amundi in its €3.5 billion recommended cash offer to acquire Pioneer Investments and was exclusive financial adviser to Standard Life on its pending all-share merger with Aberdeen Investment Management, which had several advisers on the deal. “We were present from the beginning to the end,” Leland says. 

Goldman has a large FIG team divided between London, New York, Chicago, Toronto, Tokyo and Latin America. But its success is down to more than its physical presence.

“You need to dig down further than purely the breadth of the franchise to look at the diversity of skills needed to be a good FIG banker,” says Simone Verri, co-head of the financial institutions group in London. 

He points to the bank’s work for clients as varied as UniCredit, LeasePlan or a debt collection company. “This is testament to our ability to engage clients in different situations. We have the ability to deploy experts in capital, consumer finance and many other disciplines across the piste. Understanding the assets and how you finance them is as important as the multiples.” 

Perhaps the best example of Goldman’s ability to innovate came in the form of the £9.97 billion ($12.6 billion) residential mortgage-backed securities deal backed by buy-to-let mortgages originated by Bradford & Bingley – the failed lender taken over by the UK Asset Resolution fund. Goldman acted as sponsor, financial adviser to Blackstone on its purchase and joint lead manager of the securitization. 

“ABS has been a strategic bet from our side,” says Verri. “As banks are trimming assets, you need to be able to acquire assets or finance clients. We have the ability to handle the more complex stuff.”

While the FIG business in the US has gone back to a simpler, more traditional banking model, in Europe balance-sheet repair and the streamlining of business models is key and Goldman has been able to punch above its weight in terms of reciprocity. 

“We’ve paid very little to the Street for us to be on a deal. It has to come down to what we offer in advisory,” says Leland, referring to offering up fees to passive bookrunners in return for mandates on other deals. 

And that demands an unprecedented understanding of the challenges that FIG clients face. 

“Clients’ expectations of your level of understanding of their business have changed for ever,” says Verri. “Clients are more demanding. They want their bankers to be CFOs. Balance-sheet repair is easy to target but hard to execute.”

While there may be less demand for balance-sheet repair in the US, the demand for advice on regulatory change, Fed policy and tax reform is more intense than ever. 

“We have strong intellectual capital,” explains Sarsfield. “We are very engaged on the political front. We spend a lot of time doing deep analytics on changes in the regulatory framework. We are spending at least double the amount of time on this than we were one year ago in the bank FIG space. You need a sophisticated understanding of what regulation looks like in every jurisdiction. This is very relevant – even more than it was one year ago.” 

The team has also found time to act as lead left underwriter for insurer Athene’s $1.2 billion IPO – the third biggest US IPO of 2016 – and exclusive financial adviser to Scottrade on its $4 billion sale to TD Ameritrade. 

It has a number of lucrative deals coming up such as Huntington Bancshares’ $3.4 billion acquisition of FirstMerit Corp and PrivateBancorp’s recently announced $4.9 billion takeover by Canadian Imperial Bank of Commerce.