COUNTRY INDEX
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AUSTRIA |
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Best Bank: Bawag |
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Prudent risk management, sustainable growth and outstanding efficiency earn Bawag this year’s award for Austria’s best bank. Despite the Covid crisis, the listed lender, which also has banking operations in Germany, Switzerland and the Netherlands, managed to post a net profit of €284 million and a return on tangible common equity (ROTCE) of 10% last year despite conservative provisioning. The retail and small and medium-sized enterprise segments were key drivers of the group’s impressive results, delivering a pre-tax profit of €374 million and an ROTCE of 22%.
A continued focus on efficiency limited the group’s cost-to-income ratio to 44.4% even in last year’s adverse market conditions. The merger of Bawag’s Austrian easybank subsidiary and German Südwestbank with the parent group, including the centralization of back-office functions, set the stage for further efficiency gains this year.
As with most lenders, deposit growth outpaced loan portfolio expansion in 2020, but the latter still came in at a healthy 5%. Meanwhile strong fundamentals provided both a defence against further economic upheavals and a solid base for future expansion. Bawag’s common equity tier-1 (CET1) ratio at end-December stood at 14.0% after dividend accruals, while its non-performing loan (NPL) ratio remained unchanged from a year earlier at 2%.
On the digital side, the group maintained its commitment to open banking and ecosystem development in the awards period, with innovations including fully digital account opening for SMEs under the easybank brand and the launch of new online trading functionality.
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BELGIUM |
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Best Bank: KBC |
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Best Investment Bank: BNP Paribas Fortis |
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KBC has put in a strong performance over the last 12 months, which has enabled it to release loan provisions, grow revenues and continue to cut costs. This resulted in a new attributable profit of €557 million for the first quarter of 2021, up from a €5 million loss for the same period last year. Its return on equity (ROE) of 16% for the quarter is the envy of many other banks in the region, as is its fully loaded CET1 ratio, which stood at 17.6% at the end of the first quarter, up 130 basis points year on year.
The group, led by chief executive Johan Thijs, benefits from low risk Belgian lending and stable Czech operations but is still penalized by its legacy residential mortgage loan portfolio in Ireland, which accounted for about a third of the group’s total impaired loans (3.3% of the book) at the end of June 2020. KBC will exit its Irish investments and has agreed to sell its performing exposures to Bank of Ireland.
While it reported net loan provision releases of €77 million in the first quarter of this year, it is still exposed to the expiration of Covid-19 support measures and has significant collective provisions of €757 million still in place.
The past year has seen significant digital innovation with the launch of a personal digital assistant called Kate. This is embedded in KBC Mobile and has more than 50 use cases. KBC also launched ApplePay in 2020 along with Goal Alert, which sends notifications on football matches and highlights of the game while it is still in progress. It has also teamed up with several big Belgian event companies, including cinema chain Kinepolis and attraction parks operator Studio 100, to enable clients to buy tickets via the KBC app.
BNP Paribas Fortis saw a robust year in M&A despite the pandemic, advising on a number of key transactions. These included the €1.7 billion sale of Corialis by CVC Capital Partners to Astorg Partners and the €2.0 billion acquisition of Cooper-Vemedia from Charterhouse by CVC Capital Partners.
In equity capital markets the bank was joint global coordinator in both the €207 million primary accelerated bookbuild and the €460 million rights for healthcare real estate investment trust (Reit) Aedifica – the largest ever in Belgium for a Reit. The bank was also busy on the debt side. It was an active bookrunner on the 10, 20, 30 and 40-year tranches of the $6 billion bond for AB InBev last April and worked on benchmark bond deals for Elia, Solvay, Fluvius, Cofinimmo, GBL and VGP.
On the private side it worked on US private placements for Brussels Airport, Aedifica, Shurgard and Montea and smaller private placements for Extensa and Ghelamco. As ever, BNP Paribas Fortis has led on green initiatives and in November last year worked on the first green derivative in Belgium to hedge interest rate risk for Belgian client Katoen Natie.
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CYPRUS |
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Best Bank: Bank of Cyprus |
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Despite its strong franchise and market position in the country Bank of Cyprus still faces the formidable task of dealing with its weak asset quality, which is down from a peak NPL ratio of 63% at the end of 2014 but remains challenging. Significant strides to address the problem were made over the last year with the sale of two NPL portfolios to Pimco as part of its Project Helix programme. This took the bank’s NPL ratio down from 30% to 16% in a year.
The first disposal, a €916 million ‘A’ pool of loans, was sold in August 2020 and the second, the ‘B’ portfolio, was agreed in January this year and involved a €545 million exposure comprising roughly 16,000 loans, mainly to retail and SME clients, secured over about 4,000 properties.
The latest sale achieved 44% of gross book value and reduces the bank’s stock of NPLs by 22%. It managed to reduce its NPL ratio to 16% as the result of both the portfolio sales and organic NPL reduction of around €600 million. NPLs outstanding now total €1.8 billion.
“We remain committed to further de-risking the balance sheet and we will continue to seek solutions, both organic and inorganic, to achieve our target of a single digit NPL ratio by the end of 2022,” observed chief executive Panicos Nicolaou on completion of the second sale.
The balance sheet improvement was reflected in the refinancing of the bank’s tier-2 debt in April via a €300 million tap of its EMTN programme. The deal, which was led by Goldman Sachs and HSBC, was four times oversubscribed and achieved a coupon of 6.625%.
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DENMARK |
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Best Bank: Nordea |
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Best Investment Bank: Nordea |
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As Danish banks lower the deposit threshold for charging customers negative interest rates, the country’s banks – especially its national champion, Danske Bank – continue to work to improve their reputation after the money laundering scandals of the past decade.
With deposits becoming less attractive, a well-performing retail fund offering is particularly important and Nordea overtook Danske as the largest Danish retail fund provider in the first quarter. In terms of inflows Nordea has outperformed the market by about 15% over the past three years, according to official figures cited by Barclays. A focus on sustainability, including the launch last year of a first fund targeting positive social impact, is also part of Nordea’s story.
While Nordea still trails Danske in terms of its scale as a lender in Denmark, its financial and business performance in the country has been relatively strong over the past year. This was helped by a shift to digital channels, which has allowed the bank to halve the time it takes to process a customer’s mortgage in Denmark, for example.
Nordea’s Danish customers recently started to enjoy the bank’s account aggregation service, in partnership with Swedish fintech Tink. Nordea also bolstered its mobile banking offering for Danish business customers in the period.
Under head of large corporates and institutions, Martin Persson, Nordea has also shown good progress in boosting profitability in its corporate and investment bank recently. And it has continued to be at the centre of capital markets and M&A in the region. Its Danish deals included advising the buyer and arranging the financing in EQT’s €800 million acquisition of Chr. Hansen’s Natural Colors division and advising CVC in its €2.5 billion acquisition of Stark group.
Nordea’s key bond deals included an issue for key corporate client DSV, an inaugural issue for Scandinavian Tobacco Group and a green hybrid issue for Ørsted. In equity capital markets it acted as joint global coordinator and joint bookrunner in the SKr312 million ($36.8 million) and SKr406 million accelerated bookbuilds for Copenhagen-headquartered Better Collective. It was also joint lead manager and underwriter in Tryg’s DKr37 billion ($5.9 billion) rights issue in March to finance a multi-faceted acquisition of RSA Insurance.
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FINLAND |
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Best Bank: Nordea |
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Best Investment Bank: Nordea |
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Nordea has cemented its status as a Nordic champion over the past year. In the year to the end of March its loan book grew by 3% to €334 million. Mortgage and SME loans grew by 6% and 7%, respectively, as it gained market share not just in Finland but across Scandinavia. This momentum was particularly evident in terms of profitability in the first quarter, with operating profit rising 75% and revenues up 21%.
Having enjoyed relatively resilient profitability in 2020, Nordea is now among the small number of large European banks earning their cost of equity. Its ROE was 11% in the first quarter and chief executive Frank Vang-Jensen’s apparent ability to expand business volumes while improving efficiency suggests it is a sustainable rate.
Greater attention to digital channels is helping improve Nordea’s agility, while an increasing emphasis on its environmental role is helping improve trust, both in its asset management activities, where Nordea is the largest regional player, and at group level. Nordea now has a net-zero carbon emissions objective by 2050 across its lending and investment portfolios and aims to reduce emissions by between 40% and 50% by 2030.
Better capital and cost efficiency pushed up returns in Nordea’s corporate and investment bank over the past year. Its scale remains unsurpassed regionally and especially in its Finnish home market.
In the awards period Nordea’s key deals in Finland included acting as financial adviser for Spa Holdings’ €2.1 billion public-to-private offer for Ahlstrom-Munksjö. Nordea was also the lead bank in underwriting and syndicating loan and bond financing for the deal. It was sole adviser to Altia in its €561 million merger with Arcus and sole provider of backup financing for the deal.
Nordea was also behind the recapitalization of Finnair, acting as joint global coordinator in the airline’s €512 million rights issue in July and joint bookrunner on its €200 million hybrid bond in August.
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FRANCE |
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Best Bank: BNP Paribas |
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Best Investment Bank: BNP Paribas |
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Diversification has put BNP Paribas at an advantage over the past year in terms of its financial performance. And the bank has plenty of things to say about the development of its business – whether it’s fintech, sustainability or simply financing the economic revival of its home economy.
In January 2021, for example, it launched a synthetic securitization supported by European Investment Bank and European Investment Fund credit protection, freeing up regulatory capital allocated to its French SME and mid-cap portfolio, allowing it to deploy €515 million in new loans to these sectors. It also opened BNP Paribas Principal Investments to its European institutional clients and family offices, raising €525 million for the BNP Paribas Agility Capital fund.
Strong inflows to its wealth, asset management and insurance division have been especially important given the margin pressures in retail banking, which is headed by Thierry Laborde.
Among its sustainability pledges, BNP Paribas expanded its target to end the use of coal by its electricity-producing customers by 2030 to all OECD countries. It is already no longer accepting any new customers with a coal-related revenue share of more than 25%. The bank has committed to deploy €3 billion in funding to projects associated with protecting biodiversity. It also launched a scheme to evaluate corporate clients on biodiversity-linked criteria and pledged to invest €250 million in startups working in ecological transition.
Meanwhile, the bank partnered with open banking platform Token to launch Instanea, an instant payments initiative for its merchant customers in Europe. The scheme benefits from the European Payments Council’s SEPA Instant and PSD2 application programming interfaces initiatives. It also rolled out BENEtracker, enabling international credit transfer issuers to offer beneficiaries real-time transaction monitoring.
BNP Paribas reached a top-three position in terms of investment banking fees in western Europe in the year to the end of March, according to Dealogic. It’s also investing more on the equities side, integrating Deutsche Bank’s prime services and electronic equities business.
Globally, BNP Paribas raised almost €400 billion for clients in the syndicated loan, bond and equity markets in 2020. In the first quarter of 2021, this figure was up 21% year on year, reaching €112 billion. But it is not neglecting the French home market. Indeed, according to Dealogic, BNP Paribas was a clear number one in both equity and debt capital markets in France during the awards period.
In terms of landmark deals in France, BNP Paribas was sole structuring adviser and global coordinator on a €650 million sustainability-linked convertible bond for Schneider Electric in November. It was sole structuring adviser for EDF’s €2.4 billion green convertible bond, issued concurrently with a dual-tranche hybrid bond. BNP Paribas was also bookrunner on both legs of the transaction.
It supported Chanel to issue its first sustainability-linked bonds and acted for Airbus in a €3.5 billion issue including a 20-year tranche in June. In high-yield bonds it brought names such as Altice France, Faurecia and Tereos to market, and led leveraged-loan transactions for firms including Colisee and Dedalus.
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GERMANY |
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Best Bank: Deutsche Bank |
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Best Investment Bank: Bank of America |
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Deutsche Bank achieved its best quarterly result since 2014 in the first quarter of this year, with a profit before tax of €1.6 billion, translating into a post-tax return on tangible equity (ROTE) of 7.4%. Core bank ROTE came in at 10.9%.
It has now had 13 successive quarters of year-on-year reductions in quarterly adjusted costs, excluding transformation charges and bank levies. But despite chief executive Christian Sewing’s cost cuts and business exits, notably in equities, his bank saw its highest quarterly group revenues since 2017 in the first quarter. In 2020 group net revenues were up 4% despite Covid. Core bank adjusted profit before tax was up 52% for the year.
Deutsche is still one of the best banks in areas such as transaction services and wealth management, not just in Germany but across Europe, as shown in Euromoney’s industry surveys. Amid increasing signs that Deutsche’s transformation is working and that it will meet its 2022 targets – earning the bank a review for upgrade from Moody’s – it is now better able to focus on developing new areas of its business.
In the review period Deutsche signed a new partnership with Google Cloud and intensified its payments collaboration with Mastercard. It also invested in Frankfurt fintech Traxpay as part of its supply chain finance offering. It launched green deposits for corporate clients; issued it’s a first green bond for itself and the Federal Republic; pledged to end global business activities in coal mining by 2025; and formed a sustainable finance team in its capital markets division.
In German equity capital markets Bank of America demonstrated strong momentum in the year to the end of March. It acted as global coordinator in the €2.2 billion IPO of Vantage Towers and was lead left bookrunner on the $245 million IPO of German biotech firm CureVac on Nasdaq in August, also acting on CureVac’s $518 million follow-on capital raising in January.
Bank of America led two accelerated bookbuilds for Siemens Healthineers and a €2 billion offering by RWE to finance expansion into renewable energy. It was global coordinator on a €568 million underwritten rights offering for TUI in January 2021. This was in addition to debt capital markets work for firms such as HeidelbergCement, Covestro and Fresenius Medical Care, bond deals for big names like BMW, Daimler, VW and Deutsche Post and a slew of green and high-yield issues.
In M&A, Bank of America advised Siemens on the €2 billion disposal of Flender to Carlyle; Tele Columbus in relation to Kublai’s €1.8 billion offer; and Traton on its $7.7 billion acquisition of Navistar.
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GREECE |
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Best Bank: Alpha Bank |
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Best Investment Bank: Citi |
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If there was one thing that Greek banks didn’t need last year, it was a global pandemic that would add to the NPL exposures that they have worked so hard to reduce. But that is what they got. In a recent speech, Bank of Greece governor Yannis Stournaras stated that new NPLs resulting from the pandemic will amount to between €8 billion and €10 billion. Greek banks still held €58.7 billion of NPLs at September 2020, the highest proportion of NPLs in Europe and equating to an NPL ratio of 35.8%.
The Bank of Greece has outlined plans to set up an asset management company to take up legacy NPLs from the banks, as well as new NPLs resulting from the pandemic. Under the initiative, which is currently being reviewed by the Greek government, Greek banks would transfer NPLs at net book value to the company, which is expected to create incentives for banks with higher coverage ratios.
However, progress on NPL reduction has been made and Alpha Bank stands out in this regard. The bank sold a €10.8 billion loan portfolio to US fund Davidson Kempner, along with its loan servicing subsidiary, Cepal Holdings, in November last year. This deal, named Galaxy, was the second-largest rated NPL securitization in Europe and the largest ever in Greece. Alpha Bank expects its NPL ratio in Greece to fall to 13% once the deal is completed. Chief executive, Vassilios Psaltis called the deal a “turning point” for the bank and emphasized that it will be decisive in de-risking the balance sheet.
Alpha Bank turned in a solid performance for 2020 with a net profit of €103.7 million, after taking additional €283 million of Covid-related impairments. Pre-provision income of €859 million was up 3.4% year on year. New lending hit €5.6 billion, its highest level since 2008. The bank raised €1 billion of tier-2 capital via two transactions, bringing its capital ratio to 16.9%. It has entered into a long-term bancassurance partnership with Generali, which will boost the sale of insurance products through digital channels.
Alpha recently announced a €800 million equity raise, which will be the second big capital raising by a Greek bank this year (after Piraeus Bank’s €1.38 billion deal). Goldman Sachs and JPMorgan are global coordinators. Citi, Barclays and Axia Ventures Group are bookrunners.
Citi also advised on the Galaxy securitization alongside a string of other deals across the capital markets in a busy year for the US bank. It executed the only corporate ECM deal in Greece outside the shipping sector during the awards period with the sale of a 3.9% stake in Greek retailer Jumbo. On the debt front it led on loans for shipping firms Danaos and GasLog and arranged auto lease asset-backed security financing for Avis Budget Greece.
Citi also worked on Europe’s first non-investment grade sustainable bond for power utility Public Power Corporation, which plans to cut its carbon emissions by 40% by December 2022. If it fails to meet this target the €650 million five-year deal’s 3.875% coupon will ratchet up by 0.5 percentage points.
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ICELAND |
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Best Bank: Landsbankinn |
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The slow post-2008 restructuring of Iceland’s banking sector continues in 2021, as the country prepares to partly privatize Islandsbanki on the local stock market, appointing Citi and JPMorgan as joint global coordinators.
Iceland’s best bank, however, remains Landsbankinn, the leader not just in terms of the size of its balance sheet, loan book and mortgage market share but also by profit and net interest income. Under chief executive Lilja Björk Einarsdóttir, Landsbankinn is the most efficient of Iceland’s top lenders, with a cost-to-income ratio of 47.4% in 2020. It calculates a return on equity of 8.6% during the period of these awards, higher than its largest rival, Islandsbanki.
The past year has seen Landsbankinn reap the benefits of its recently completed core systems upgrade in collaboration with the Icelandic Banks Data Centre. In early 2021 it became the first Icelandic bank to receive a credit rating for its domestic covered bonds. It also published its first sustainable finance framework and concluded the sale of its first green bond.
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IRELAND |
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Best Bank: Bank of Ireland |
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Best Investment Bank: Citi |
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Restrictions associated with the Covid-19 pandemic hit Irish banks hard last year, with the sector reporting a consolidated net loss of €1.6 billion in 2020, compared with a consolidated net profit of €842 million in 2019. This was largely due to higher loan loss provisions, which increased to €2.7 billion in 2020 from €241 million in 2019. Irish Banks’ NPLs had increased by 26% year on year by the end of 2020.
Ireland’s best bank this year, Bank of Ireland, did not escape unscathed. The impact of the pandemic, along with a revised definition of default in the first half of 2020, saw its NPLs increase by 11% year on year; although the equivalent rise at rival Allied Irish Banks (AIB) was 24%. Underperforming loans increased by 183% year on year at Bank of Ireland and by 136% at AIB.
While Bank of Ireland reported an underlying loss before tax of €374 million for the whole year, the group returned to profitability in the second half of 2020, with underlying profits of €295 million. By the end of the year 93% of payment moratorium recipients in Ireland returned to their pre-Covid schedule and 6% had additional forbearance measures approved. In the UK book, 90% of payment breaks returned to the pre-Covid schedule, while 2% needed additional forbearance measures.
As the industry emerges from the pandemic, Bank of Ireland is investing in digital transformation to better position itself for the wider recovery. It will reduce the size of its branch network in Ireland and, as part of this move, it has entered into a new partnership with the Irish post office, An Post. This will allow customers to access to banking services at more than 900 local post offices.
In April 2021, the bank also announced the proposed acquisition of the entire performing loan portfolio of KBC Bank Ireland. Under the deal it could acquire up to €9 billion of performing loans, almost all of which are residential mortgages. This would potentially increase its total net loan portfolio in Ireland by 19% and its Irish residential mortgage portfolio by around 39%.
The bank’s CET1 capital ratio stood at 14.7% in March 2021, 490bp above regulatory requirements for the end of 2021. And despite a tough year, Bank of Ireland shares rose 154% over the awards period, making it the best performing stock in the Euro Stoxx Banks Index.
Citi dominates investment banking in Ireland with a 15% market share between 2018 and 2021. For 2021 year to date, the US bank has a 39.3% market share for all M&A, capital markets origination and high-yield debt activity in the country.
As ever, the bank was active in aviation, acting as lead financial adviser to AerCap on its agreement to purchase GECAS from General Electric in March. In the same month it acted as sole structuring agent and global coordinator in the structuring of IAG Group’s $1.75 billion multi-borrower revolving credit facility with a sublimit available to each of Aer Lingus, British Airways and Iberia. It is secured on aircraft and airport slots at Heathrow and Gatwick.
M&A work over the year included advising ICON on the acquisition of PRA Health Sciences, where Citi was sole underwriter, bookrunner and mandated lead arranger on the associated $6.3 billion acquisition financing package. In the debt markets the US bank was sole green structuring adviser on Ardagh Metal Packaging’s $2.8 billion cross-border green bond, the largest high-yield green bond to date.
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ITALY |
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Best Bank: Intesa Sanpaolo |
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Best Investment Bank: Mediobanca |
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If you were to draw up a wish list of attributes for the ideal European bank in the early 2020s, Intesa Sanpaolo would tick many of the boxes, with its heavy bias towards fee income, market-beating efficiency and a proactive attitude to consolidation.
In the awards period, Intesa completed one of the mergers that defined European banking in 2020, UBI Banca. As chief executive Carlo Messina begins to reap the cost synergies of that deal, Intesa Sanpaolo’s efficiency ratio is already one of the lowest among Europe’s largest banks at 52% in 2020. In addition, almost two-thirds of its 2020 gross income came from wealth and protection activities – its insurance division achieving a record year, as non-motor, non-life revenues grew to €500 million.
In terms of its support to the real economy, in 2020 Intesa provided €10 billion of new credit to 2,500 Italian production chains through its Sviluppo Filiere programme, working closely with the supply chains of firms such as Enel and Gucci. And in March this year it launched Motore Italia to help Italian SMEs trade and invest in the recovery. Motore Italia aims to provide €50 billion of new lending, focusing on the digital and environmental transition.
Intesa’s leadership in terms of technology, sustainable finance and corporate social responsibility should not be underestimated. Its mobile app is among those ranked top for functionality in Europe by Forrester. In February it completed a €1.3 billion synthetic securitization to fund green energy projects, the first such deal in Italy – as well as numerous other green transactions run by its investment banking division, notably the first green BTP issuance.
Whether you look at Dealogic data or the group’s financial results, Mediobanca’s success in Italian investment banking is clear. Client activity has been exceptionally strong over the past year, resulting in a surge in reported revenue in the corporate and investment banking division, thanks in large part to the strong link with its private banking division. The IPOs of GVS and Philogen, on which it acted as joint global coordinator, are just two examples of its preeminent role in the Italian equity capital markets.
According to Dealogic, in Italian M&A Mediobanca had a market share by deal volume of slightly more than half in the awards period. It acted on more than twice as many completed deals as its nearest rivals.
Mediobanca was instrumental in the Intesa Sanpaolo-UBI Banca merger, which completed last summer. Its Messier Maris & Associés division also acted as lead adviser to PSA Group in its merger with Fiat Chrysler. Its less well-known advisory work in Italy included the acquisition of DEPOBank by Banca Farmafactoring, Violetta Caprotti’s complex succession at Esselunga and the acquisition by Ardian of a stake in INWIT.
Best Bank: BGL BNP Paribas
BGL BNP Paribas continued to grow and consolidate its position in Luxembourg, even while it focused on community support in the face of the healthcare crisis earlier in 2020. The bank grew banking income by 5% to €1.5 billion over the year, although 2.4% of this was accounted for by a capital gain related to the sale of investment property.
Retail and corporate loan outstandings were up by 8%, boosted by an increase in mortgages and capital investment loans. Average deposit volumes grew by 2%. The bank’s wealth management business also had a very good year in Luxembourg, with average loan outstandings up by 12% and assets under management up by 2%.
Although the leasing business was hit hard in the first half of the year, it recovered sufficiently to record a manageable drop in loan outstandings of 3% by the year end.
“2020 was a challenging and difficult year in many respects,” Béatrice Belorgey, country head of the BNP Paribas Group in Luxembourg, said when the results were announced. “Our staff and clients have all done an outstanding job of adjusting to this new normal, and the bank’s results attest to the resilience of our operations. We are doing everything in our power to continue to help our clients through appropriate solutions, to support the Luxembourg economy and to contribute to a sustainable recovery.”
The bank introduced a range of support measures to tackle the pandemic. It provided 5,000 FFP2 masks and 30,000 surgical masks to the ministry of health and a total donation of €100,000 was made to the Hôpitaux Robert Schuman Foundation, Caritas Luxembourg and Stëmm vun der Strooss to support hospital staff and vulnerable communities.
The bank also matched every employee donation to healthcare charities and organizations assisting vulnerable people and contributing to medical research. In the summer of 2020 it led the Solidarité Coronavirus initiative: every time a payment was made using a BGL BNP Paribas credit card, the bank contributed 10 cents to a fund.
By December 31, 2020, the bank had also granted 5,322 loan moratoriums in Luxembourg. It had also granted around 100 government-backed loans.
Away from its Covid measures, BGL BNP Paribas is also launching a new initiative to acquire minority interests in Luxembourg businesses through direct investment in unlisted profitable commercial, industrial and technological companies with a turnover exceeding €10 million. And in November 2020 it became a strategic partner of i-Hub to offer an innovative digital management and storage system. The proposed solution will ultimately provide every client with free access to a centralized know-your-customer repository.
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Best Bank: Rabobank |
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Best Investment Bank: Rothschild & Co |
It has been a tough time for Dutch banks, even without Covid. Not only have they had to contend with the impact of negative interest rates on businesses that are heavily reliant on net interest income, but they have also suffered some of Europe’s biggest-ever fines for money laundering failures.
In this tough environment, Rabobank – under chief executive Wiebe Draijer – held onto its dominant position in Dutch retail and produced some interesting new initiatives. It launched an embedded financing offering to sellers on bol.com, one of the largest online retail platforms in the Benelux region. With the borrower’s permission, Rabobank uses bol.com sales data to decide within 15 minutes how much can be borrowed and on what conditions.
Separately, Rabobank partnered with the 2Tokens Foundation in a new initiative to foster the practical use of tokens.
On the sustainability front – reflecting its industry-beating environmental, social and governance ranking by Sustainalytics – it launched Rabo Carbon Bank, a scheme focused on developing projects that store carbon dioxide in trees and soil, in cooperation with farmers. The bank is designed to mediate between the parties that store carbon dioxide and the firms that want to reduce their emissions or compensate for them.
The Netherlands’ best investment bank, Rothschild & Co, advised on 15 publicly disclosed M&A transactions in the awards period. This included mid-market activity as well as large international deals such as the €3.3 billion sale by José de Mello and Arcus of an 81% stake in Brisa to an ABP-led consortium; and Royal Dutch Shell’s $2.5 billion sale of its Queensland Curtis Island infrastructure assets to Global Infrastructure Management.
It was not just active in M&A, however, it advised on 13 debt advisory and restructuring situations, including Boels’ €1.8 billion underwritten senior loan financing to fund the acquisition of Cramo and refinance existing debt. It also advised on Dümmen Orange’s €495 million debt restructuring and €55 million new-money contribution. Its equity advisory business included CTP’s €5.6 billion IPO on Euronext Amsterdam and Just Eat Takeaway.com’s €1.1 billion dual-tranche convertible bond issue.
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NORWAY |
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Best Bank: Nordea |
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Best Investment Bank: ABG Sundal Collier |
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As Euromoney was deciding this year’s awards, DNB was moving towards a takeover of Sbanken, a leading local online only bank, which had listed in 2015. But it has not been an easy year for Norway’s biggest lender, especially as it faces increasingly strong competition from its main rival, Nordea. The latter saw a relatively resilient performance in Norway in 2020. And while Nordea is focusing increasingly on costs at a group level, it is also making gains in terms of market share, especially in Norway.
Nordea’s acquisition of Norway-based equipment finance and factoring firm SG Finans, completed in October 2020, has bolstered its market share and net interest income, especially in commercial banking, where lending volumes continued to increase in the first quarter. It also notched up an increase in mortgage share in Norway in 2020, partly thanks to the development of its digital offering. Nordea’s Norwegian customers have also recently started to enjoy the bank’s account aggregation service, developed in partnership with Swedish fintech Tink.
Nordea also agreed to acquire occupational and individual pension portfolios from Frende last year, bringing them into its Norwegian insurance subsidiary, Nordea Liv, and entering into a long-term pension distribution agreement with the Norwegian savings banks that own Frende.
Oslo-listed ABG Sundal Collier was a clear first in Dealogic’s equity capital market bookrunner rankings over the year to the end of March. The investment bank also stood out in terms of the number and volume of M&A deals, and it was also behind important bond issues.
In one of the biggest ever software buyout deals globally, ABG Sundal Collier advised Visma and the selling shareholders in a $12.3 billion transaction in which TGP, Warburg Pincus and General Atlantic became new investors. It has also advised on four private placements and secondary sell-downs for Kahoot!, including a NKr2 billion ($235 million) private placement in October to Softbank, which has become the game-based learning platform’s largest shareholder.
ABG Sundal Collier was global coordinator and bookrunner on IPOs including Link Mobility, Aker Horizons, EcoOnline and Sonans Holding. It advised on the NKr9 billion merger of Arcus and Altia. Finally, it advised Norwegian Air Shuttle on its €6 billion refinancing, including a debt-for-equity swap.
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PORTUGAL |
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Best Bank: Santander |
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Best Investment Bank: Santander |
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It was a challenging year for all banks in Portugal, but this year’s award winner, Santander, remained focused on supporting the community and adapting its business to the demands of the emergency. In addition to granting legal moratoriums, the Spanish bank offered 11,500 Covid-19 credit lines totalling €1.2 billion to SMEs over the year, giving it a market share of 22.3%. It increased new lending, particularly to the key tourism, livestock and exports industries, and was responsible for 18.4% of such lending in the country.
“The bank’s results in 2020 were, as expected, strongly affected by the Covid-19 pandemic,” observed chief executive Pedro Castro e Almeida when the full-year results, which saw net income fall 43.9% year on year to €295.6 million, were announced. “But, despite the challenging year we all had to face, these results were only possible because Santander is a solid bank, with high levels of capitalization, the best ratings, a strong reputation; and it is well prepared to face the challenges of transforming our business model,” he emphasized.
The bank claims the best cost-to-income among Portuguese banks of 43.8%. Its CET 1 ratio is a robust 20.6%, up 5.6 percentage points from the end of December 2019. The focus is now on its digital transformation strategy and continuing to build market share.
The progress made in this regard has been striking. Santander now originates one in four new consumer loans in Portugal. Its Mundo 123 retail proposition, which is a current account that provides cashback on the Mundo 123 card account, has proved particularly popular. Mortgage lending also had a good year, growing by 31%. Santander has dominated Portugal’s IFRRU 2020 programme, which supports urban renewal, having supplied 53% of total credit and offered 151 contracts by year end. Its corporate Santander Negócios 123 solution, has been taken up by more than 7,800 companies.
The bank is committed to corporate responsibility in Portugal and has invested €7.7 million in community initiatives in education, youth, health, people with disabilities and the elderly. Together with its universities initiative, this has benefitted 365 associations and 54,169 people and has achieved the financial inclusion of 311,125 people since 2019.
Santander has prioritized its digital offering this year, a strategy that has certainly borne fruit. The number of digital customers grew 20% to 930,000 and now accounts for 55% of all customers. App users are up 20%, online channels account for 42% of total sales and €5.7 million of digital transactions now take place each month.
The best return on equity of the major banks operating in Portugal, with ROE of 6.9% and ROTE of 8.7%, rounds off a solid performance by Santander in Portugal over the awards period. Indeed, OnStrategy’s RepScore ranking for 2021 sees it as the most reputable banking brand in the country.
This also seems to extend to investment banking, where Santander makes it a double award year in Portugal. It is the market leader in M&A advisory, having advised on six deals over the awards period in the energy, renewables, real estate and technology, media and telecom sectors.
These included acting as exclusive M&A and debt adviser to Glennmont Partners on the sale to Finerge of a 100% stake in a 30 megawatt operational solar photovoltaic (PV) portfolio composed of four solar PV plants. This was the largest transaction of operational solar PV assets undertaken to date in Portugal. Santander also advised on its third telecom infrastructure transaction in Portugal for NOS in the €550 million sale of NOS Towering to Cellnex.
The bank acted on a range of infrastructure projects this year, the largest of which was as mandated lead arranger on Project Monet, which provided acquisition finance to Engie, Mirova and Predica for six large hydro power plants, with an installed capacity of 1,689 megawatts, located in the north of the country. Santander was also bookrunner on a €300 million green bond issue for Redes Energéticas Nacionais and on EDP’s 60.5 year hybrid green bond earlier this year.
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SPAIN |
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Best Bank: CaixaBank |
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Best Investment Bank: Morgan Stanley |
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CaixaBank is at the forefront of the key theme of the year in southern European banking at the moment: consolidation. Its transformational merger with Bankia, announced in September, only completed its legal phase at the end of March. But it shows CaixaBank is grasping the opportunity to realize cost synergies in its home market and to grow revenues in its diversified range of core businesses, which include a dominant life insurance company, as well as asset management.
The Bankia deal also makes sense because of the importance of scale in terms of maintaining technology investment. This is already an area in which CaixaBank, under chief executive Gonzalo Gortázar, has demonstrated leadership, not just in Spain but internationally. It was the first bank in Spain to rollout ATMs with facial recognition technology. This year it is also launching a trailblazing new scheme to give customers the same user experience at ATMs as in their mobile and online channels.
The Bankia merger is not the only thing keeping CaixaBank busy. Its online millennial offering, imagin, reached three million users in January. Meanwhile, imagin tied up with Airbnb to offer users a selection of specially priced experiences in the local community. Earlier in the awards period, the bank also developed a new risk classification model using quantum computing and announced a new prepaid services joint venture with Global Payments.
On the sustainability front, CaixaBank issued its first tier-2 green bond; signed up as a founding member to the Net Zero Bank Alliance; and established a new sustainable finance team in its corporate, institutional and international banking division, which financed 52 sustainable finance operations worth €12 billion in 2020.
Morgan Stanley is Spain’s best investment bank, especially in M&A. Financial institutions is a key competency of the bank and it was sole financial adviser to CaixaBank in the Bankia merger and sole financial adviser to BME in its €3.1 billion acquisition by SIX.
In telecoms it was sole financial adviser to CK Hutchison on its €10 billion towers portfolio sale to Cellnex. It advised Cinven, KKR and Providence, a consortium that took MasMovil private for €5.3 billion. In the energy sector it was sole financial adviser to Iberdrola on its acquisition of PNM Resources and sole M&A adviser to EDP on its €2.7 billion acquisition of Viesgo and partnership with MIRA.
Morgan Stanley’s equity capital markets activity included acting as joint global coordinator on Cellnex’s €4 billion rights issue; on IAG’s €2.7 billion rights issue; and on EDPR’s €1.5 billion accelerated bookbuild offering. Its debt capital markets work included a €3 billion dual-tranche hybrid offering for Iberdrola and a €1.5 billion 10-year bullet tier-2 deal for Santander.
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SWEDEN |
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Best Bank: SEB |
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Best Investment Bank: Citi |
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In 2020 Sweden’s best bank, SEB, posted a relatively resilient operating profit, only down 4% as costs fell in line with activity. In the first quarter, meanwhile, the group’s return on equity bounced back to a market-leading 14%.
In a hot mortgage market SEB has been gaining market share as traditionally dominant lenders Swedbank and SHB fall behind. It is reaping the benefits not just of a comfortable capital level but also of changes to its mortgage business in the late 2010s put in place to improve its speed of service and responsiveness. This, rather than just pricing, appears to have put it at an advantage, especially when its larger rivals have in some cases suffered more distractions.
As part of the acceleration of its digital transformation, in March SEB announced a long-term strategic partnership with Google Cloud. Chief executive Johan Torgeby is also following a slightly different path for its business outside Scandinavia compared with other Nordic banks. SEB has moved to expand its corporate banking business to the Netherlands, while strengthening it in Austria and Switzerland.
Among international investment banks Citi is unusually present across Scandinavia and the strength of its Nordic business was particularly evident in Sweden this year. Its deals included advising Carrier on its $1.1 billion sale of a minority stake in Beijer Ref to EQT. Among other M&A deals, it also advised Triton on its sale of DSI Underground to Sandvik.
In equity capital markets Citi acted as global coordinator on Nordnet’s $1.2 billion IPO. It was joint bookrunner on Embracer’s $890 million equity issue. It was also global coordinator on Nordic Entertainment Group’s $520 million equity issue; a $400 million convertible bond and equity issue for Cellink; and on Calliditas’ $90 million US IPO. Key bond deals in Sweden in the awards period included corporate deals for Verisure, SKF, and Hemsö, and deals for financial institutions including Intrum, If and Swedbank.
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Best Bank: UBS |
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Best Investment Bank: Citi |
Renowned as the leading regional and global wealth manager, in its home market UBS is also the leader in personal and corporate banking, providing basic banking and mortgages through a network that spanned 239 branches at the end of 2020, but which was set to shrink by 44 in the first half of 2021.
Under new chief executive Ralph Hamers, UBS is on track to be a more digital firm. Last June it launched Key4 an open platform for real estate financing for digital-savvy mortgage clients. It allows UBS clients to extend existing mortgages and sift offers of new financing on owner-occupied homes from third parties including institutional investors.
In the age of platform banking and open banking, UBS also collaborates with insurance companies in its home market. For example, it works with Swiss Re subsidiary iptiQ to offer clients life insurance that fits seamlessly into UBS’s mortgage advice. And, with Zurich Insurance, it has launched a new bancassurance offering for startups to cover the needs of young entrepreneurs in Switzerland.
Citi heads the equity capital markets league table for Swiss issuers in the 12 months under review and is also well placed in M&A and debt capital markets, making it Switzerland’s best investment bank this year.
Highlights included a couple of accelerated equity offerings in the shares of Swiss food packaging company SIG as Canadian private equity investor ONEX sold out of the company in stages. It helped a SFr540 million ($589 million) deal in March 2020 to be priced at a tight 4% discount to the previous close and as joint lead bookrunner on a SFr660 million block of SIG shares in December 2020, got the book covered in 15 minutes.
In May 2020, Citi was sole global coordinator on the private placement by Saint-Gobain of a 10.75% stake in Swiss specialty chemicals company Sika for SFr2.6 billion. It was the largest ECM deal of the year to that point and the largest Swiss ECM deal for three years.
Citi is a lead adviser on cross-border M&A deals between Switzerland and the US, for example advising LafargeHolcim on the $3.4 billion acquisition of Firestone Building Products from Bridgestone and advising long-time client Roche on the $1.8 billion tender offer for GenMark Diagnostics.
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UNITED KINGDOM |
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Best Bank: Lloyds Banking Group |
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Best Investment Bank: Barclays |
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With the end of the Brexit transition period coinciding with a second wave of Covid infections, the UK has suffered much over the past year. However, its banks already showed signs of a recovery in the first quarter of 2021. This was especially true at Lloyds Banking Group. Its return on tangible equity bounced back to 13.9% in the first quarter of this year, signalling a good chance of it earning its cost of equity in future.
António Horta-Osório presented his last quarterly results as chief executive in late April, handing over to chief financial officer William Chalmers on an interim basis. Not long afterwards, he flew to Zurich to become chairman of Credit Suisse. Back in the UK, in June, he received a long-expected knighthood, largely in recognition of the turnaround at Lloyds during his 10 years at the helm.
As Horta-Osório frequently said, one of Lloyds’ strongest points is its efficiency and this continued to improve over the period. Total costs were down 4% in 2020 and down 2% in the first quarter of this year. Its cost-to-income ratio was 55% in 2020 and 52% in the first quarter. Meanwhile, the bank’s digital push helped bring its proportion of products originated via digital channels to 85% in 2020 and the number of mobile app users to almost 13 million. Its digital initiatives this year included a new partnership with cloud-native payments fintech Form3.
March 2021 was Lloyds’ biggest month for total mortgage completions since 2008; this included lending almost £4 billion to first-time buyers. Since 2018, it has lent about £40 billion to first-time buyers, well above its £30 billion target in its 2018/2020 plan. In this period it also exceeded a £6 billion additional net lending target to startups, SMEs and mid-market customers and provided £9 billion of funding to the UK’s social housing sector.
Last July Lloyds was the first UK bank and the first FTSE 100 company to launch a Race Action Plan, including a target to increase black representation in senior roles from 0.6% to at least 3%. In December it complemented the plan with more support for black business owners and entrepreneurs, unveiling a black business advisory committee and partnerships with Foundervine and the Black Business Network.
The determination of Barclays chief executive Jes Staley to compete in global investment banking appeared to pay off this year, with the division providing a bulwark of profitability at a time when the consumer and commercial businesses were struggling. Profits in corporate and investment banking rose 35% in 2020 and 45% in the first quarter of 2021, achieving returns on tangible equity of 9.5% and 18% respectively.
In the UK, according to Dealogic, Barclays is the only bank in the awards period to achieve top-five positions across ECM, DCM and M&A.
One example of the development of the UK business under Alisdair Gayne, head of UK investment banking, is its work for National Grid, its longest standing FTSE 100 corporate broking client. Barclays’ work for National Grid included the £14.2 billion acquisition of Western Power Distribution and the £5.2 billion sale of the Narragansett Electric Company. Other M&A work saw it advise Tesco, another corporate broking client, on the £8.2 billion disposal of its Thai and Malaysian businesses.
In the equity capital markets Barclays was joint global coordinator on the £1.9 billion IPO of The Hut Group, playing a key role in the reopening of the UK IPO market after the Covid-19 crash. It was also sole global coordinator on a £103 million secondary placing in Hargreaves Lansdown and joint global coordinator on a £216 million primary raise for SSP Group.
