Awards for Excellence 2018
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Not just revenues but also returns are behind the success this year of UBS, western Europe’s best investment bank. The Swiss firm stands out for a distribution and advisory-led business that has attracted fewer of the kind of questions over its sustainability that others have had to endure.More activity in the primary equity markets in western Europe, particularly in Switzerland, played to UBS’s strengths. Its equity capital markets revenues rose by 56% to SFr1 billion ($1.01 billion) in 2017 and were again up in the first quarter of 2018. It was global coordinator on the SFr2.4 billion IPO of electricity meter firm Landis+Gyr, a SFr2.3 billion rights issue for Lonza and on Galenica Santé’s SFr1.9 billion IPO. It was also global coordinator on Santander’s €7.1 billion rights issue.
Even if it is better known as an equities house, UBS’s expertise in financial institutions has been key in what is perhaps the most difficult and rapidly changing part of the market: bank capital trades. Examples include Bank of Ireland’s debut holding company bond in sterling and dollars, and Nationwide’s £500 million core capital deferred shares.
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| Andrea Orcel. UBS stands out for its distribution and advisory-led business |
Having shrunk or exited from the more capital-intensive markets businesses half a decade ago, UBS’s right-sized model is one others have tried to follow. Its earlier move has afforded stability of strategy and leadership under investment bank president Andrea Orcel. That said, it is developing its business, with recent hires such as Marco Illy in Switzerland, Sebastian Pollems in Germany and former European Commissioner Jonathan Hill, now a senior adviser on Brexit in the UBS corporate client solutions unit. The start of 2018 showed more momentum, with advisory roles for GKN against Melrose’s £8 billion bid, J Sainsbury on its proposed £7.3 billion merger with Asda and Vodafone on its €18 billion proposed acquisition of continental European assets from Liberty Global.
The advantage of UBS’s greater focus on equities over fixed income, currencies and commodities has been in evidence again over the review period, with the relatively strong performance of equities revenues industry-wide, particularly in the first quarter of 2018. The transformation of its foreign exchange, rates and credit business – including the fruits of investment in technology – was also in evidence. It rose from third to second in Euromoney’s 2018 FX survey.
UBS’s investment bank beats the other main European players’ profitability, at almost 13% in 2017, according to Berenberg. Despite the parsimonious use of its balance sheet, it has been in the driving seat of many transformational deals. Those closed during the awards period include ChemChina’s $45 billion takeover of Syngenta; British American Tobacco’s $64 billion acquisition of the remaining 57.8% stake in Reynolds; GVC’s £6.8 billion merger with Ladbrokes; and Cinven’s $4.3 billion takeover of Stada Arzneimittel in Germany.
