2010 Western Europe Awards for excellence: By country

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Awards for Excellence 2010

Region awards

Western European winners by country

Austria
Belgium
Cyprus
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
UK

AUSTRIA

BEST BANK
RZB

BEST INVESTMENT BANK
Morgan Stanley

The story of Austrian banks over the past decade has been one of expansion into central and eastern Europe. The region has been severely hit by the global recession and the level of non-performing loans has increased over the past year.

Amid this turmoil RZB still made a profit before tax of €238 million in 2009, mainly attributable to its Austrian operations, which account for 52% of its assets. Most of the profit was booked via mark-to-market gains on securities and financial instruments, as loans advanced to customers fell by 10%, as did net interest margins. Still, provisioning for bad loans rose a modest 28%. Over the past year RZB has sought to raise its capital buffers, with its tier 1 ratio now at 10.8%, up from 7.2% a year ago.

Owned by a network of eight regional Austrian banks, with a focus mainly on Austrian and multinational customers, RZB attracted the unwanted attention of the equity markets earlier this year when it announced plans to merge with its non-Austrian unit, Raiffeisen International, which it had listed as a separate entity in 2005. On the day of the announcement shares in Raiffeisen, in which it held a 73% stake, plummeted more than 20%. The shares have since recovered after more clarity was given on the motives for the merger, which RZB says will improve the group’s access to the international capital markets.

Morgan Stanley dominated investment banking in Austria during 2009, advising on four transactions, which gave it a 26% market share. The stand-out deal involved the real estate business of Immofinanz, in what became one of the largest ever real estate corporate and financial restructurings in Europe. It involved a transfer of ownership between two Immofinanz subsidiaries, then an upstream merger into the parent company and an exchange offer of convertible bonds, the first such convertible exchange in Austria. In addition Morgan Stanley acted as bookrunner in the year’s biggest rights issue, for brickmaker Wienerberger, which became the first fully underwritten discounted rights issue in Austria. Rounding things off, the bank was a dominant player in the government bond and government guarantee bank bond markets, giving it a market share of 8%.

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BELGIUM

BEST BANK
BNP Paribas Fortis

BEST INVESTMENT BANK
JPMorgan

On May 12 2009, BNP Paribas took over Fortis Bank amid the most severe decline to hit the Belgian economy since Second World War. As part of the takeover, the French bank had promised the Belgian government it would maintain a strong lending bank to support the Belgian economy and to use Belgium as a headquarters for some of its regional businesses so as to maintain employment.

The speedy overhaul of the Fortis business, including an €150 million investment to upgrade the branch network, led to a quick resumption of net customer asset inflows at a retail and wholesale bank with 3.7 million customers that serves one-third of the Belgian population.

BNP Paribas Fortis, the best bank in Belgium, announced that it would make €1 billion of credit available to Belgian SMEs and within a year had financed 75,000 projects.

The bank also improved its private banking coverage of mass-affluent and high-net-worth customers in Belgium, through an expanded network of private banking centres.

With 457 large corporate clients, 34,000 mid-cap clients and strong coverage of Belgian’s many public sector enterprises, it is the market leader in the country. In the debt capital markets rankings it stands second for the period under review, just behind JPMorgan, as a lead arranger of debt financing for Belgian borrowers in the wholesale markets.

The strong performance of JPMorgan in arranging bond deals for Belgian borrowers complements its leadership in corporate finance advisory to make it the best investment bank in Belgium. Among its landmark M&A deals, it acted as adviser to Fortis in the series of transactions that ended in the government’s sale of its 75% stake in the bank to BNP Paribas.

The US bank also acted as adviser to Anheuser-Busch InBev, the world’s largest beer company, on a couple of large disposals of businesses to private equity buyers. It sold its Korean business, Oriental Brewery, to KKR and amusement park business Busch Entertainment to Blackstone. Underlining its strong relationship with the company, JPMorgan was a lead bookrunner on its $3 billion five- 10- and 30-year tranche bond deal in May 2009 that captured a big coupon improvement for the borrower.

It also advised CVC and acted as financing arranger for the private equity firm’s purchase of the central and eastern European operations of Anheuser-Busch Inbev.

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CYPRUS

BEST BANK
Bank of Cyprus

Bank of Cyprus is the biggest bank in Cyprus, with a 28% share of the domestic market. Like most Cypriot banks it also has a smaller share of the Greek banking market, in its case 4%. However, it is less exposed than some of its rivals to the Greek market, with just one-third of its loan book affected.

Moreover, it remains well capitalized, with a loan/deposit ratio of 90%, and it achieved its profit target in 2009, reporting after-tax profits of €321 million compared with €502 million the previous year. The reduction was driven by increased provisions from its Greek operations. Its non-performing loan ratio remained relatively contained at 5.6%, from 3.8% at the end of 2008, and it maintained a strong capital position, with a core tier 1 ratio of 7.4%, up from 6.5% the previous year, after successfully issuing €645 million of convertible capital securities.

Bank of Cyprus remains one of the few European banks to continue to distribute a cash dividend. Investors have reciprocated, if its high level of dividend reinvestment (about 40%) is anything to go by, confirming the trust investors have in the bank’s strategy.

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DENMARK

BEST BANK
Danske Bank

BEST INVESTMENT BANK
Nordea Corporate Finance

Danske Bank has been faced with some problems over the past year but the performance that the bank achieved justifies it being named Euromoney’s best bank in Denmark. A rigid cost-control programme has delivered and pre-impairment operating income was up 43% year on year for 2009, enabling the bank to nearly double its pre-tax profit for the year to DKr1.7 billion ($283.2 million). The bank is still struggling with loan-loss provisions on its exposure to both domestic markets (111 basis points) and Ireland (576bp), but provisions remain low in Sweden, Finland and Norway.

Danske has improved its performance in the face of a decline in lending volumes in Denmark and lower short-term interest rates and thus is well positioned once the impact of its bad loans to property developers, shipping and agricultural borrowers has worked through. This should take place over the next year: impairments in its Baltic banking business are down 75%. Its strong tier 1 capital ratio of 14.1% gives it a solid foundation on which to build its profitability over the next few years. But management still faces a number of problems – not least shareholder dissatisfaction, as evidenced by the recent call for the resignation of chief executive Peter Staarup by the shareholders association president.

Nordea Corporate Finance has played a key role in the most significant equity deals in Denmark last year – most notably Moeller-Maersk’s convertible capital €1.1 billion accelerated bookbuild in September 2009 and the €800 million capital increase for Vesta in April last year. Indeed it has been a part of every big equity transaction in Denmark over the past 12 months.

It has also been involved in most of the important M&A transactions. The bank acted as exclusive lead financial adviser to PBS Holding in its merger with Norway’s Nordito, which was the largest M&A transaction in Denmark by far last year and created a leading northern European provider of solutions within payments, cards and information exchange.

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FINLAND

BEST BANK
Nordea

BEST INVESTMENT BANK
SEB

Nordea dominates the banking markets in Finland with its 40% market share. It maintained its strong position over the past 12 months with active involvement in the debt and equity capital markets, ranking fourth in both according to Dealogic’s league tables. The bank is also the number one arranger of loans in Finland, with a 25% market share. During the year it advised department store Stockmann on a €45 million rights issue and was active in the private placement market for Tiimari, Biotie and Honkarakenne. The Finnish economy is likely to suffer from the global economic downturn, however, dominated as it is by exports. GDP growth contracted by 7.8% in 2009 and unemployment is expected to rise to 10.2% in 2010.

M&A activity in Finland over the past 12 months has been extremely subdued. UPM Kymmene’s acquisition of Botnia South America in Uruguay from M-Real and Metsäliitto Cooperative was the most significant deal of the year and was advised by Goldman Sachs and Credit Suisse. But the award for best investment bank in Finland goes to SEB because of its strong showing in both M&A and ECM.

The Swedish bank acted as financial adviser to Kemira for its €200 million rights issue, placed Novator’s Amer Sports shares in a secondary placing, acted as sole financial adviser to Metso in its offer for Tamfelt and to Kemira in its spin-off of paint business Tikkurila. SEB was ranked number two in Dealogic’s ECM league table for Finland last year and number three for M&A (number one for M&A within the Nordic and Baltic region). It also came in a respectable fourth in the loans category for the country.

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FRANCE

BEST BANK
BNP Paribas

BEST DEBT HOUSE
Société Générale

BEST EQUITY HOUSE
BNP Paribas

BEST M&A HOUSE
JPMorgan

BNP Paribas is the best bank in France thanks to its combination of a market-leading corporate and investment bank with a strong retail platform that was able to attract new deposits and increase lending while keeping a tight control on risks in the year under review.

In 2009, the bank attracted new account openings and raised both sight deposits (by 7.5%) and other forms of customer assets, including savings accounts. Retail bank lending rose by 4.3% while that of many of its peers fell; the bank also increased corporate and real estate lending while maintaining a lower cost of risk than its competitors.

Cost of risk in the French retail bank fell to 37 basis points in the first quarter of 2010 from 48bp in the fourth quarter of 2009. The retail bank has grown profits faster than its larger domestic rival, Société Générale.

On a group-wide level, BNP Paribas has also brought its overall cost of risk below that of Société Générale. It continued in 2009 to report higher profits than either its great rival or Crédit Agricole, as it did in 2008 and 2007.

It is as a wholesale corporate and investment bank, with strong capabilities across debt and equity capital markets, M&A advisory and risk management that BNP Paribas clearly stands out in France. Its linked financing and advisory capabilities are demonstrated by its work with Pernod Ricard. The bank launched an €1 billion rights issue for the company at the same time as advising it on the disposal of the Wild Turkey bourbon business to Campari of Italy.

BNP Paribas enjoys a healthy lead over Crédit Agricole and SG Corporate and Investment Bank in the bookrunner rankings for equity deals by French issuers in the year under review. It took bookrunner roles in large deals for Lafarge and Danone. It was sole global coordinator on the first French acquisition finance related rights issue of the current cycle, a €2.1 billion deal for Axa enabling it to buy out strategic minority shareholders in Axa Asia Pacific.

The deal achieved a 98.9% take-up and was 2.7 times oversubscribed, having been launched as the share price rallied.

BNP Paribas also led important equity-linked deals, including Eurazeo’s bond exchangeable into shares of Danone; an exchangeable bond for Artemis, giving buyers exposure to the rallying shares of Vinci; and a convertible bond for Air-France KLM, which introduced a priority period for existing shareholders to subscribe to the bonds.

Reassessment

But BNP Paribas does not sweep the board in France, nor is it clear of the domestic competition. Société Générale is the best debt house in France. In the wake of the banking crisis that followed the collapse of Lehman Brothers, many large French corporates reassessed their funding strategies and increased use of the bond markets.

One of these was Vivendi, for which Société Générale arranged benchmark seven- and 10-year deals in 2009, following a successful transaction in the turbulent final quarter of 2008. It also arranged important debt capital markets transactions, including five-, seven- and 10-year deals for Lafarge and a 10-year deal for Alstom. Société Générale is also advising Alstom on its bid for Areva T&D in a consortium with Schneider-Electric.

JPMorgan is the best M&A house in France where it tops the league tables, narrowly beating Deutsche Bank.

JPMorgan has done a lot of advisory work for French financial companies in the past 12 months. In July 2009, it advised on the merger of two leading French banks, Caisse Nationale des Caisses d’Epargne and Banque Fédérale des Banques Populaires, to create Groupe BPCE, a leading French retail and savings bank.

JPMorgan acted as sole adviser to Société Générale on the creation of a joint venture in asset management with Crédit Agricole. The combination creates the leading asset manager in France, the fourth largest in Europe and ninth largest in the world.

Away from the financial institutions sector, JPMorgan advised EDF on the acquisition of 49.99% in Constellation Energy Nuclear group in the US.

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GERMANY

BEST BANK
Deutsche Bank

BEST DEBT HOUSE
Deutsche Bank

BEST EQUITY HOUSE
Morgan Stanley

BEST M&A HOUSE
Goldman Sachs

Deutsche Bank is the best bank in Germany. It is more strongly capitalized and profitable than its domestic private bank peers. After standing out during the banking system crisis of 2008 and 2009 by surviving on its own and not requiring government capital or protection from bad assets, it has since reconfirmed its commitment to the country by acquiring the private banking business of Sal Oppenheim and taking a 29.75% stake in Postbank.

Deutsche, whose retail banking division already serves 10 million German clients, is now pursuing strategic initiatives for bringing its products and services to the additional 14 million mainly retail and small-business clients of Postbank in Germany.

Josef Ackermann, Deutsche Bank: reconfirmed its commitment to Germany

Josef Ackermann, Deutsche Bank: reconfirmed its commitment to Germany

Trust in the bank is evident from the net new money flow of €5 billion into its private bank in 2009.

Deutsche strengthened its position among German mid-caps by remaining open for business during the financial crisis. It increased credit to German Mittelstand companies in 2009 compared with 2008 and underscored its commitment with a dedicated Mittelstand fund for Germany.

As a bookrunner of deals from German borrowers in the debt capital markets Deutsche Bank leads the field by a healthy margin over its nearest competitor and wins the accolade as the best debt house in Germany.

Deals that underline its capabilities include a rare long-dated sterling deal from a German issuer, of £700 million for Deutsche Telekom; a €1.1 billion deal in the troubled automotive sector for Bosch, its first visit to the debt capital markets for three years; and a €2.5 billion three-tranche financing, including high-yield bonds, for HeidelbergCement, a cornerstone of the company’s financial rehabilitation.

Deutsche’s capabilities and power in its home market are evident in its leading financings for other banks, including: three out of five Pfandbriefe transactions for Commerzbank’s subsidiary, Eurohypo; the first issue of mortgage Pfandbriefe for Correalcredit Bank; and leading the first senior unsecured bond deals for WestLB and BayernLB after the expiry of state guarantees.

Things are much closer in the equity league tables, where there is barely a euro cent between Deutsche Bank and the winner of the best equity house in Germany award, Morgan Stanley.

Morgan Stanley, as part of its wider restructuring advisory role, acted as a global coordinator and bookrunner on HeidelbergCement’s €4.4 billion combined primary and secondary equity offering in September 2009. This amounted to a new IPO of the company through the largest combined rights issue and secondary placement for a European industrial company in 2009.

Morgan Stanley had already acted as a bookrunner on the first large German rights issue to fund opportunistic acquisitions by a German company since the crisis, a €460 million deal for Rhön-Klinikum. This achieved 99.9% take-up, despite a narrow discount of just 11.9% to the theoretical ex-rights price, far tighter than the 40% discounts or wider on many of the recapitalization deals since the crisis.

In March 2010, Morgan Stanley helped reopen the German IPO markets with a €660 million deal for Kabel Deutschland Holding, the largest cable operator in Europe. This came amid a turbulent period when the overwhelming majority of IPOs announced on both sides of the Atlantic had to be withdrawn, reduced in size, or priced well below indicated range.

Goldman Sachs is the best M&A adviser in Germany, where it topped the league tables, partly thanks to acting as lead financial adviser to VW on the investment by Qatar Holding of €7 billion in Porsche and VW. This is the largest investment by a sovereign wealth fund in Germany and stands to be a pivotal moment in the string of transactions designed to lead to a merger of Porsche into VW.

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GREECE

BEST BANK
National Bank of Greece

BEST DEBT HOUSE
HSBC

Greece’s banks face big challenges as the nation enters an era of austerity and economic restructuring that is likely to lead to a spike in non-performing loans. National Bank of Greece is the best-placed bank to weather the storm over the next few years. The largest bank in Greece, it maintains a 32% share of savings, 24% of the retail deposit and mortgage markets, and 19% of the consumer lending market. This helps it limit the erosion of deposit margins and thus makes it Greece’s most profitable bank.

A rights issue in 2009 helped boost its capital ratios and has allowed it to gain a share in lending at the expense of its less well-capitalized competitors. As with all Greek banks, non-performing loans as a percentage of total loans have risen, to 6.4% in the case of National Bank of Greece. With the highest credit rating of all the Greek banks, it benefits from a solid deposit franchise, giving it a loans-to-deposits ratio of under 100%. The bank’s expansion into Turkey has also helped, evidenced by strong positive earnings.

HSBC is the top foreign bank in the new-issue market for Greek government debt, lead managing three benchmark transactions over the qualifying period. While subsequent events have overtaken Greece’s ability to access the international bond markets, the transactions HSBC was involved in were well executed over a short time period and performed well in the immediate secondary markets. It also completed several transactions for Greek banks. For instance it acted as sole structuring adviser and joint lead manager on EFG Eurobank’s hybrid tier 1 issue, which featured a newly designed contingent principal share settlement mechanism.

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IRELAND

BEST BANK
Bank of Ireland

BEST INVESTMENT BANK
JPMorgan

Bank of Ireland looks set to emerge from a restructuring with its business model and independence largely intact. It has successfully raised €3.4 billion of capital, including a €1.9 billion rights issue, a €500 million placement with a group of institutional investors and a debt-for-equity swap. The Irish government now holds a 36% stake in the bank. Its main rival, Allied Irish Banks, needs to raise €7.4 billion of new capital before the end of the year or face a further capital injection from the government. The competitive landscape of the Irish banking market has changed a great deal since the financial crisis, with the exit and failure of a number of competitors to Bank of Ireland and AIB.

Bank of Ireland is better placed from a balance-sheet perspective to take advantage of the smaller playing field. In addition, the haircuts it has taken in disposing of €12 billion of impaired loans with the National Asset Management Agency (Nama), the so-called bad bank, are smaller than competitors’, making it more stable among its peers. Yet Bank of Ireland warns of tougher times ahead, forecasting losses on non-Nama loans to total €4.7 billion by the end of March 2011, meaning most analysts now predict that Irish banks won’t return to profit until 2012 at the earliest. The bank says it’s approving four out of five loan applications to small and medium-sized enterprises, which account for most of the country’s private-sector employment, a ratio it claims it has consistently maintained over the past three years.

JPMorgan gained the largest slice of the Irish investment banking market, with a top-three positions in bond, equity and loan market league tables. Although just outside the eligible date for this year’s awards, UBS and Citi led Bank of Ireland’s €4.3 billion capital raising, dwarfing by some margin 2009’s capital markets activity. Debt restructurings featured prominently among Ireland’s two main banks, AIB and Bank of Ireland. JPMorgan actively advised AIB in June 2009 and March this year.

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ITALY

BEST BANK
Intesa Sanpaolo

BEST INVESTMENT BANK
JPMorgan

Banks in Italy have faced uncertain times over the past 12 months, especially when the sovereign European debt crisis threatened to take hold in 2010.

The biggest two banks in Italy have remained relatively resilient to the financial turmoil. Both avoided direct state aid. For much of the past decade, UniCredit has gained approval from many analysts and investors for the scale of its ambitions, in particular through its network in central and eastern Europe. That exposure prompted a collapse in its share price in 2009, although UniCredit stock has since regained much of its lost ground.

However, it is the more conservative strategy of its main rival, Intesa Sanpaolo, that is now paying dividends. Intesa has a smaller market capitalization than UniCredit but it is the largest retail banking network in Italy.

The bank’s adjusted net income of €710 million for the first quarter of 2010 was up 76% on its numbers for Q4 2009, and up 10.2% compared with one year earlier. Intesa Sanpaolo’s tier 1 ratio stood at a relatively healthy 8.5%. Costs were reduced by 2.2% over the year.

JPMorgan is the international investment bank that stands out in a market where local players UniCredit, Intesa Sanpaolo and Mediobanca dominate domestic business.

JPMorgan performed particularly well in the M&A sector during Euromoney’s review period, topping the league table for completed deals by deal volume, according to Dealogic. The bank was involved in seven of the 10 biggest deals, most notably the acquisition by Enel of a 25% stake in Endesa, by which the Italian utility gained full control of its Spanish counterpart. JPMorgan acted as adviser of choice to Enel on that deal and a series of other M&A transactions, totalling $25 billion, which also required structuring and capital markets solutions. These included a €8 billion rights issue for Enel, the landmark Italian equity deal of the year, on which JPMorgan was sole international global coordinator.

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NETHERLANDS

BEST BANK
Rabobank

BEST DEBT HOUSE
RBS

BEST EQUITY HOUSE
JPMorgan

BEST M&A HOUSE
ING

Rabobank is the best bank in the Netherlands. Depositors, creditors and borrowers have had strong reason, since the crisis that shook the other large banks in the Netherlands, to be thankful for the presence of a large cooperative bank providing mortgage lending, savings banking and SME lending through more than 1,000 branches, together serving 6.7 million retail clients and 800,000 corporate clients.

Profits fell at Rabobank in 2009 by 17% but the bank remained solidly profitable and strongly capitalized, with a 13.8% tier 1 ratio.

Private clients continued to redirect deposits to the local Rabobanks, which together grew savings deposits by 6% in 2009. Armed with this and a credit profile that allowed it easily to raise €40 billion in long-term funding from wholesale markets, Rabobank Group bolstered its position in the mortgage lending market and grew its share of corporate loans. Even while loan demand declined overall in the Netherlands, Rabobank Group grew private-sector lending by 2%. Even after higher bad debt costs, the bank was able to produce €2.3 billion of net profit.

RBS wins best debt house in the Netherlands on the back of a string of high-profile debt capital markets deals and loan transactions, including: reopening the corporate hybrid market for TenneT; setting new benchmark pricing in the loan market with a revolving credit for Philips; reopening the RMBS market for Delta Lloyd and the covered bond market for ABN Amro; introducing NIBC to the yankee market and tapping the long-dated sterling bond market for KPN.

JPMorgan is the best equity house in the Netherlands, where it tops the league tables. It acted prominently on most of the large ECM deals from the Netherlands. It was joint global coordinator and bookrunner on the €7.5 billion rights issue ING launched last October to repay capital injected by the Dutch state. JPMorgan also helped SNS Reaal raise €135 million through an accelerated bookbuild, also to repay state capital.

In November 2009, JPMorgan was joint bookrunner on the €1.1 billion IPO of Delta Lloyd, out of Aviva. JPMorgan also acted as sole financial adviser to Dutch-based real estate investor Cório on its €1.3 billion acquisition of a shopping centre property portfolio and was sole global coordinator on the €600 million equity offering to support this.

ING is the best M&A house in the Netherlands, acting in 21 deals and providing financing and advice on a string of cross-border deals involving Dutch targets and acquirers, such as on TenneT’s purchase of E.On’s long-distance power grid and the acquisition by Sweden’s Vattenfall of Nuon.

The landmark €885 million TenneT/E.On deal, in which ING acted as sole M&A adviser to the Dutch state-owned utility, is a key step in creating the transmission system underpinning a northern European electricity market. ING brokered the deal at board level between the two companies and oversaw all aspects of its execution, while providing ratings advice and bridge finance to TenneT and advising on its post-acquisition capital structure.

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NORWAY

BEST BANK
DNB Nor

BEST INVESTMENT BANK
JPMorgan

Helped by lower than feared loan losses in the Baltic states and the benign economic environment at home, DnB Nor achieved solid growth this year and cemented its dominance of the Norwegian banking environment. It has a 30% share of the retail market and 35% share of the corporate lending market in the country and reported a profit before tax of NKr4 billion ($626.6 million) for the first quarter this year. Its loan-loss impairments dropped by 41% year on year. Baltic lending now accounts for just 4% of DnB Nor’s total loan book and its loan-loss provisions have been far lower than predicted (34 basis points against 57bp), which has certainly helped the bottom line.

But the bank also achieved strong performance across the board (with the exception of its 51% owned Baltic subsidiary DnB Nord), particularly from its life and asset management arm, Vital, Norway’s largest life insurance company. It also put itself on a firm capital footing via a successful NKr14 billion capital increase and its tier 1 leverage ratio of 5.4% is the strongest in the Nordic states. Along with other regional banks it has benefited from the perception that it is insulated from problems in the eurozone, although as one of the largest shipping banks in the world it has exposure to Greece.

JPMorgan has had a very successful year in Norway, being involved in seven M&A deals during the period. It has acted as adviser on the most significant deals in the country, including the $11.8 billion cross-border Telenor deal (where the bank was sole adviser to Telenor); the acquisition of Tandberg by Cisco Systems, where JPMorgan advised the target; and Axel Springer’s purchase of StepStone, where the US firm advised Axel Springer. It tops the M&A league table with $9 billion of advisory mandates in Norway, giving it a 50% market share.

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PORTUGAL

BEST BANK
Santander Totta

BEST DEBT HOUSE
Caixa BI

BEST INVESTMENT BANK
BES Investment

Despite the turmoil that has caused such havoc in the debt markets of Europe’s southern countries, the landscape of Portuguese banking remains largely unchanged. Once again, by every standard measure of banking success, Santander Totta has outpaced its peers and takes the award for best bank in Portugal. Taking its performance in calendar 2009, its net profits of €523 million, core capital ratio of 9.2%, return on equity of 20.8% and NPL ratio of 1.3% were best in class – and in the three months to March 2010 its lead in these variables increased.

That said, the competition is closing. In particular Banco Espírito Santo is now starting to give Totta a run for its money. In 2009, its cost-income ratio was better, its net profits (boosted by foreign activities) were just €1 million short and its NPL coverage was a shade better too. As long as BES continues to improve, and leaves behind its reputation as a profligate consumer of capital, Totta faces a tougher challenge to retain its title in the future.

The most striking thing about Portugal’s debt markets is their fragmentation. In the period under consideration 33 institutions vied to underwrite 78 issues worth about €37 billion, with no single institution gaining more than an 8.6% share of the market. In addition, most of the issuance is plain vanilla and from either banks or large public-sector entities, with most key underwriters involved in most of the key deals. So untangling quality from run-of-the-mill is particularly difficult.

The two leading contenders are Caixa Banco de Investimento and last year’s winner HSBC. Excluding deals involving related entities, HSBC wins on sheer volume and its continued efforts to develop the securitization markets, with the €1.24 billion Tagus Leasing securitization, have not gone unnoticed.

However, Caixa BI shades this year’s award for best debt house for its pervasive presence in every sector of the market, its roles in deals for its competitors (for example it acted as joint bookrunner in the €1 billion issue for Santander Totta) and its commitment to innovation, with its involvement in the first-ever securitization of electricity regulatory receivables and in the first benchmark public-sector covered bond.

For combined debt, equity and M&A performance, BES Investment takes Portugal’s best investment bank award this year. The primary equity markets were too quiet to give an award, especially since the only two significant transactions involved parties related to BES Investment or its parent. However, the bank was ranked number one on Euronext Lisbon, with market share of 15%, a position it has held four years out of the last five. While the bank lags the top two in the debt markets, it is nevertheless selected by issuers such as HSBC when they need distribution for debt inside Portugal.

In M&A the bank is a clear leader. In the awards period the bank led in terms of both deal value and number, with market share of 53% and 27% respectively. Impressively, of the 16 transactions the bank advised on, six were purely domestic and 10 were cross-border, a reflection of the growth of the bank beyond Portugal.

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SPAIN

BEST BANK
Santander/Banesto

BEST DEBT HOUSE
HSBC

BEST EQUITY HOUSE
Morgan Stanley

BEST M&A HOUSE
JPMorgan

Individually, the banking networks branded Santander and Banesto would have a good chance of winning Euromoney’s award for best bank in Spain. Collectively, they stand out at a time of real turmoil in the Spanish banking system.

The problems in the Spanish savings bank system – epitomized by the collapse of CajaSur in May – show the extent of the problems that poor economic performance, high unemployment and big exposure to a plummeting real estate sector have heaped on the country’s financial institutions. With access to capital markets becoming more difficult for even some of the country’s best-run banks, concerns are unlikely to dissipate in the near future.

Ana Patricia Botín, Banesto: impressive numbers

Ana Patricia Botín, Banesto: impressive numbers

Santander has not been immune to these problems but its performance has been remarkable considering them. In 2009, the group made €2 billion in net profit in Spain, up 7% when the sector as a whole suffered a 30% decline. The bank achieved this largely by increasing its deposit base in Spain: by 25% in 2009 and again by 32% in the first quarter of 2010. Santander has NPL and coverage ratios that easily beat the sector averages, and its exposure to the construction and real estate sector is also below average. With its deposit base continuing to soar through its market-breaking 4% deposit offering, launched in March this year, Santander is equipping itself with the funding and liquidity that will allow the bank to ride out the worst storms in the Spanish banking market.

Meanwhile Banesto keeps producing impressive numbers: its strong revenue generation capacity and low credit-risk profile made it a leader in terms of pre-provision profit versus loan-loss provisions, at 116 basis points; for the first quarter of 2010, Banesto continued to far outperform its peers in net interest income growth at 2.4% year-on-year, compared with such rivals as Banco Popular at –8.1% and Sabadell at –5.2%. Banesto is also the only Spanish bank, and one of the few in Europe, to have made no capital increase in the past seven years, because of its strong internal capital generation: 70bp after dividends in the past 12 months.

HSBC has established itself as a leader in a highly competitive field for debt products in the Spanish market. It led more than 100 transactions in a range of currencies and bond products for the full spectrum of issuer types.

For financial institutions, HSBC has led a number of €1 billion-plus covered bonds and senior debt issues for the two leading Spanish banks, Santander and BBVA. Spanish public-sector issuance has been very active, with HSBC scoring prize mandates for the Kingdom of Spain as well as leading agency issuer ICO, and has led a range of issues for regional and municipal borrowers.

Morgan Stanley has long been one of the leading players in the Spanish primary equity markets, having been global coordinator on four of the five largest Spanish IPOs in history.

The Spanish IPO markets were quiet during the past 12 months, because of economic and market uncertainty, and the rights issue market moribund as Spanish banks focused on debt exchange offers, in which Morgan Stanley played a leading role.

But the firm showed its continued leadership in equity with a €1.325 billion ABO of 250 million primary shares in Iberdrola, the largest ever ABO in Spain. It has since launched a €1.45 billion IPO of Amadeus, the largest such deal since December 2007 and the largest tech IPO in Europe since 2000.

M&A markets have also been relatively subdued in Spain, but JPMorgan has emerged as the top adviser for the past 12 months. It advised on seven transactions worth more than $1 billion. These included acting as financial adviser to Iberia on its merger with British Airways and as adviser to Gas Natural on three strategic disposals.

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SWEDEN

BEST BANK
Svenska Handelsbanken

BEST INVESTMENT BANK
Bank of America Merrill Lynch

In a year when domestic rivals SEB and Swedbank have been dealing with the negative impact of their foreign lending, Svenska Handelsbanken has emerged as the clear winner among Sweden’s banks. Handelsbanken is the fourth-largest universal banking group in the Nordic region and had total assets of SKr 2.15 billion ($277.4 million) at the end of September 2009. It has a leading market position in Sweden, where it commands solid market shares in all segments of the banking industry.

Described by one commentator as "contender for the title of European bank least affected by the financial crisis", its refusal to expand into the Baltic region is now paying dividends for the bank. It delivered a 13% return on equity for 2009 and full-year profit of SKr13.7 billion (down 10% year on year). First-quarter profit this year was up 3% year on year.

Par Boman, Svenska Handelsbanken: a clear winner

Par Boman, Svenska Handelsbanken: a clear winner

Although far more domestically focused than its peers (Sweden accounts for 60% of pre-tax profit), it has successfully established operations in Norway, Denmark, Finland and the UK. Its non-domestic operations have grown 36% year on year, including 7% growth in the UK loan book in 2009. Impaired loans account for just 0.6% of the loan book. Stadshypotek, Handelsbanken’s wholly owned domestic mortgage-lending subsidiary, accounts for 33% of consolidated assets, which have been primarily funded through the covered bond market. This orientation towards property could, however, cause problems should performance deteriorate.

Bank of America Merrill Lynch wins best investment bank in Sweden this year thanks to its solid performance in both the debt and equity capital markets. It was active in the 144A market, the Reg S market, the covered bond market and the subordinated debt markets for a range of Swedish issuers last year, including Nordea, Svenska Handelsbanken, Swedbank and SEB.

In addition to being ranked number three in both the senior unsecured and subordinated debt league tables for the country, BofA Merrill was also ranked the number one equity bookrunner in Sweden last year. It was involved in both the jumbo rights issues during the period – for Nordea and Swedbank – and executed the combined accelerated placement and convertible bond offering for Alliance Oil. BAML also holds the number one trading share position for Sweden of 12.8%, according to Markit MSA.

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SWITZERLAND

BEST BANK
Credit Suisse

BEST DEBT HOUSE
Credit Suisse

BEST EQUITY HOUSE
UBS

BEST M&A HOUSE
Credit Suisse

Credit Suisse continues to benefit from its much better showing through the banking system crisis that so badly hit its great rival UBS. During the year under review its Swiss commercial and retail banking units returned solid financial results thanks in part to continuing inflows of net new assets, amounting to more than $12 billion, which accelerated in the first quarter of 2010.

The bank has been working hard to increase cooperation and cross-referrals between its private banking, asset management and investment banking units in the Swiss regions, deriving $1.8 billion in revenues as a result.

With 110,000 corporate and institutional clients in Switzerland, Credit Suisse is also the best debt house. It tops the bookrunner rankings by a considerable margin with a 35% market share, well ahead of second-placed UBS with 22%, according to Dealogic data for the 12 months from the end of the first quarter of 2009 to the end of the first quarter of 2010.

The Swiss franc bond market was busy in 2009 as risk aversion receded and private banking and retail investors resumed a search for yield. Credit Suisse helped arrange many of the most noteworthy large deals for public-sector issuers, such as the World Bank, the Inter-American Development Bank and the African Development Bank as well as more frequent issuers such as the European Investment Bank and KfW. It also led sovereign deals for Austria and Poland and a string of bank deals.

Credit Suisse also led deals for Swiss corporates such as Swisscom, Holcim, Bucher and Axpo.

Credit Suisse enjoys a sizeable lead over UBS in the M&A adviser rankings and is the best M&A house in Switzerland for its track record in both cross-border and domestic M&A deals. Last November, it acted as exclusive adviser to Swiss Prime Site on its unsolicited all-share tender offer for Jelmoli, a first such in Switzerland. The $3.4 billion deal creates the country’s largest real estate company.

Also in November 2009, when France Telecom and TDC decided to merge their Swiss operations – Orange Switzerland and Sunrise – Credit Suisse advised Orange on the $4 billion deal that creates the second-largest fixed-line and mobile phone company in Switzerland.

UBS is the best equity house in Switzerland, where it heads the league tables of ECM bookrunners with almost double the value of deals of its closest rival. Those numbers are slightly distorted in a year when the biggest equity deals in Switzerland centred on the government’s sell-down of UBS stock. But UBS showed its credentials when Holcim needed to raise finance last year to acquire Cemex Australia.

UBS underwrote the SFr2.1 ($1.9 billion) rights issue, the largest in Switzerland in 2009, and got it done as sole global coordinator at a narrow 24% discount to the theoretical ex-rights price and with a 99.9% take-up.

It took roles in most of the rights issues, placements and convertible bonds in Switzerland last year, even acting as joint books on a SFr300 million convertible for Swiss Prime Site. UBS was sole bookrunner on the SFr243 million seven-year convertible for Baloise, priced at a 35% premium. This was the first European convertible for an insurance company since 2005.

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UK

BEST BANK
Santander

BEST DEBT HOUSE
RBS

BEST EQUITY HOUSE
JPMorgan Cazenove

BEST M&A HOUSE
UBS

While rivals such as RBS and Lloyds came to terms with their restructurings, and HSBC and Barclays focused on their expanding global businesses, Santander continued to make hay in the UK banking market.

Having added Alliance & Leicester and Bradford & Bingley to its existing Abbey portfolio, and rebranded to bear its parent’s name, Santander is no longer a smaller bank gaining market share fast: it is now a substantial player that continues to generate the most impressive numbers in UK banking.

António Horta-Osório, Santander: efficiency drive in the UK makes the bank a winner

António Horta-Osório, Santander: efficiency drive in the UK makes the bank a winner

In 2009 net deposits for Santander were up 12% on the previous year. Santander wrote one in five mortgages on a gross basis and increased lending to SMEs by 16%. Profit of £1.5 billion ($2.2 billion) outperformed the personal financial services division of Lloyds, the biggest UK retail bank.

That performance is continuing into 2010, with net income up 15% in the first quarter. Santander’s efficiency drive, led by chief executive António Horta-Osório, meant that the UK bank’s cost/income ratio fell to the lowest in its peer group at 38.5%. Meanwhile, return on risk-weighted assets at 2.2% also outperformed peers.

Next, Santander will be hoping to add to its burgeoning SME portfolio with its bid for the Williams & Glynn branches of RBS. But it might face a more concerted challenge to its market share growth next year, as Lloyds emerges strongly from its HBOS-induced troubles with the largest UK platform.

It will come as no surprise that the award for best debt house in the UK was a three-way fight between HSBC, Barclays Capital and RBS. There is little to choose between them. But RBS scoops the award this year both for the range of deals it printed in the UK market and for the fact that it maintained a leading position despite an extremely challenging period for the group, demonstrating the strength of the firm’s sterling franchise.

Highlights of RBS’s past 12 months include a joint bookrunner role on Virgin Media’s record dual-tranche £1.5 billion high-yield deal; SAB Miller’s debut €1 billion bond, which was nine times oversubscribed in just six minutes; clear leadership in the UK secured corporate debt markets, where RBS was on every big deal; an inaugural euro bond for hedge fund Man; and its role as bookrunner on the UK Debt Management Office’s first offering under its new syndication programme, a £7 billion 25-year issue.

As many as half a dozen firms had a good shot at winning the award for best UK M&A house this year, with the UK one of the busiest and most competitive markets in the world.

But UBS demonstrated an ability to be on the most important deals and be involved in a range of transactions that its nearest competitors could not quite match.

UBS advised on six of the 10 biggest transactions, including the restructuring and recapitalizations of RBS and Lloyds. It advised on the defence side of the two of the highest-profile UK deals: Kraft/Cadbury and Anglo/Xstrata. And it advised on almost twice the amount by value of its nearest competitor on cross-border acquisitions by UK corporates, with mandates for blue-chip companies such as BAT, GSK, Vodafone and British Airways. It also advised the UK government on the £17 billion acquisition of British Energy by France’s EDF.

The combination of global powerhouse JPMorgan and UK blue-blooded adviser Cazenove always had the potential to dominate the UK market, and which ever way you look at it over the past 12 months, JPMorgan Cazenove has done just that in UK primary equities.

The firm completed 54 equity deals, according to Dealogic – almost twice the number of its nearest rival, Bank of America Merrill Lynch. For overall volume, JPMC distances second-placed Credit Suisse with a 21% market share.

Coming off the back of its role in HSBC’s £12 billion rights issue in 2009, JPMorgan Cazenove was on all the largest equity offerings, especially in the financial institutions sector, with lead roles on rights issues for Lloyds (twice) and Standard Chartered. It was bookrunner on the landmark corporate deal of 2009, Rio Tinto’s $15.2 billion rights issue – the largest ever non-financial and non-government backed rights issue in the UK, and the largest ever capital increase in the mining sector. JPMorgan Cazenove also played a key role in one of the most complex transactions of the year – a fully underwritten £660 million firm placing and open offer for Yell, which addressed the company’s debt maturity and covenant issues through an interdependent debt restructuring and equity deal.

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