Awards for Excellence 2019
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Citi’s local presence gives it an edge with financial sponsors, particularly the regional players, such as Mid Europa Partners, that drive a large chunk of deal flow in CEE.
“We spend more time than our global rivals with these firms,” says Theo Giatrakos, head of investment banking for central and south-eastern Europe. “They are as important for us as some of the western European sponsors.”
Another factor that has worked to Citi’s advantage is the steady retreat of other global banking groups from CEE.
“We have seen a retraction by some of our competitors, particularly on the capital markets side,” says Giatrakos. “That’s not how Citi operates. We don’t get overexcited when markets are good and we don’t panic when they are softening. We’ve been in this region for decades and we want to maintain our presence irrespective of changing levels of activity.”
Citi’s commitment is particularly noticeable in the Commonwealth of Independent States. In Kazakhstan, it is the last bank standing of the international players, while even in Russia its offering of full global functionality increasingly sets it apart from bulge-bracket rivals.
“In the past five years, the pond in Russia has shrunk and the number of fish has shrunk even more,” says Irackly Mtibelishvily, chairman of CEEMEA corporate and investment banking. “The shock of the most recent sanctions round was pretty profound and further limited international banks’ appetite for Russia. We have seen a number of firms significantly curtail their activities, if not outright exit.”
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| Irackly Mtibelishvily |
Capital markets were closed to Russian issuers for more than six months after the imposition of sanctions on individual businessmen in April last year.
As confidence began to return this year, Citi took the lead in reopening the markets for Russian firms. The bank led Credit Bank of Moscow’s €500 million benchmark bond in February, the first from a Russian private-sector borrower since the April sanctions, and in mid March it reopened the Russian equity capital markets with a secondary offering of R36.2 billion ($573 million) of Norilsk Nickel stock.
Other landmark capital markets transactions during the awards period included IPOs for the Port of Tallinn, Slovenian lender NLB and Turkish retailer Sok Marketler, the largest from the jurisdiction since 2008. Citi also secured mandates on 44 Eurobond issues with a total allocated value of $8.4 billion, according to Dealogic, including Kazmunaigas’s $3.25 billion deal and EP Infrastructure’s €750 million market debut.
Citi’s dominance across the full spectrum of investment banking products also reflects the integration of the firm’s global banking, capital markets and advisory businesses last summer.
“We now have seamless collaboration in everything from acquisition finance and corporate banking to leverage capital markets and advisory,” says Giatrakos. “This gives us an edge when it comes to complex transactions.”
It also helps Citi maintain an edge at times of market volatility, adds Marzena Fick, head of CEE DCM.
“We now all work together on funding across credit classes for issuers,” she says. “From our desk we talk to all the sovereigns, all the financial institutions and all the corporates in the region.
“That gives us very good visibility of what’s going on in local markets and we can therefore adapt quickly to changing environments.”
A willingness to put balance sheet to work in CEE – albeit selectively – also differentiates Citi from international rivals.
“We tend not to lead with balance sheet, partly because our risk appetite has changed and partly because there is ample liquidity in most markets in CEE today,” says Mtibelishvily. “We use it strategically, where it’s important for the client and for ourselves that we provide capital.”
Giatrakos agrees that balance sheet is no longer key to securing investment banking mandates in CEE. “Clients in the region are increasingly sophisticated and have access to ample liquidity,” he says. “These days they award their investment banking business on merit. It is no longer just about lending relationships.”
