|Awards for Excellence 2011|
Regional Awards for Excellence 2011: Latin America
All regions and countries
|Latin American winners by country |
Best bank: Santander Rio
When approaching an IPO, it is important to be able to tell potential investors about recent strong financial performance and about room for growth. Santander Rio can do so: central bank figures show that it has the best net income ($404 million), net income growth (36.2%), cost-to-income ratio (40.6%), fees-to-expenses ratio (91.2%) and return on equity (52%) in the Argentine financial sector, bettering BBVA, Macro, HSBC and Citi on all those counts. And it can now add Euromoneys award for the best bank in Argentina to part of its story building up to its American Depositary Receipt IPO.
Two banks dominate the debt markets in Argentina: Deutsche Bank and Bank of America Merrill Lynch. The latter shades the Dealogic table in deal volumes ($1.11 billion versus $1.06 billion), has done two more deals during the qualification period, and just pips this years winner of the Latin American debt house to the award for best house in Argentina. BAMLs deal for Banco Supervielle in November 2010 was the first international issue for an Argentine bank since 2007, which it followed with a $200 million bond in January 2011. It can also point to winning three mandates from the Province of Buenos Aires as proof of client satisfaction, including the provinces $750 million issue of new 10.875% 10-year notes in January. BAML was also joint bookrunner on the $275 million, 10-year non-call five-year issue for energy company IMPSA, which was subsequently re-opened twice.
Morgan Stanley wins the award for best equity house in Argentina. There werent many equity deals in the past year (six), but Morgan Stanley deserves to be recognised for being involved in arguably the three most important. The bank was global coordinator for YPFs $1.1 billion follow-on, at the time the largest Argentine equity offering in almost 20 years. Despite volatile markets, the deal was many times oversubscribed, with demand from 120 investors across North America and Europe. Morgan Stanley also brought steel group Terniums $1 billion follow-on to market, as well as Adecoagros New York-listed IPO. The bank continues to be involved in the countrys key equity transactions, being the global coordinator and stabilization agent on Arcos Dorados $1.25 billion IPO.
The best M&A house in Argentina is JPMorgan. The bank was exclusive adviser to Chinese CNOOC in its acquisition of a 50% stake in Argentine oil and gas company Bridas for $3.1 billion. JPMorgan was also exclusive adviser to Brazilian steel company Usiminas in its divestiture of 3.5% in Ternium (tied to the follow-on equity transaction). The bank also advised Banco Patagonia on the sale of a controlling stake to Banco do Brasil. This deal, which closed on April 21 2010, was a landmark transaction for the country and its financial system, representing the largest M&A in the financial sector since the Argentine crisis a decade ago, and the first acquisition by Banco do Brasil outside its home country.
The Bolivian financial system is experiencing a high level of liquidity that, when coupled with a competitive environment, has placed downward pressure on the interest rates charged for most products. The tightening of interest-rate spreads has made generating profits difficult and affected the earnings of all the countrys banks.
Against this backdrop, Banco Mercantil Santa Cruz, the largest and most profitable bank in Bolivia, posted impressive results, with return on equity of 22.5%. The bank increased its loan portfolio by more than 20% to $960 million, a market share of 18%. The bank maintained its share of total deposits ($1.5 billion, representing a 20.7% market share) despite a focus on profitability that saw the bank eschew some low-margin business in the past year.
The bank has also successfully addressed its previous weakness in non-performing loans. Non-performing assets decreased considerably as a percentage of the loans to 4.6%, from above 6%. Furthermore, loan-loss provisions cover 100% of the non-performing loan portfolio, and 90% of the non-performing loans are deemed to have sufficient security to minimize the likelihood of the bank incurring real losses.
Best bank: Itaú Unibanco
It is probably no surprise that Itaú Unibanco, the best bank in the region, is also the best bank in its home market of Brazil, for many of the same reasons. Below the headline net profit of $13.3 billion (up 32.3% on the same period) and credit portfolio growth (up 20.5%), there are some interesting figures that reveal credit trends in the country.
Itaú Unibancos individual credit rose 18.3% and business-client credit by 21.8%. The bank increased its lending to the micro-, small- and middle-business segment by 31.2% to R$83.2 billion. This focus affected its retail and financing operations, which dropped by 23.1% to R$210.3 billion. But the credit highlight was the real-estate portfolio, which grew by 55.8% to R$13.3 billion. Despite expanding credit rapidly, the number of defaults of over 90 days dropped 1.4 percentage points to 4.2%, which the bank attributes to a more conservative approach to credit-approval adopted in late 2008 (which of course has yet to be tested by a downturn).
The bank leads Brazils consumer-credit segment, with 40.8 million clients through its Itaucard and Hipercard businesses and partnerships. In 2010 the value of transactions was $129.6 billion, a 26.1% increase over 2009. Itaú is also Brazils leader in the segment of vehicle acquisitions its portfolio reached $60 billion in 2010, 15% higher than the year before.
In 2010 the bank said it had finalized the integration process of Itaú and Unibanco. This combined entity is truly a behemoth in Brazil and is achieving the trick of making money in a hot market while not ringing alarm bells about credit and asset quality or the sustainability of returns. The question is: sitting at the top of the pile in Brazil, can it sustain its performance?
JPMorgan wins the award for the best debt house in Brazil. The bank has a leading 11.8% share of international debt issues. These have been the theme of the past two years as appetite for Brazilian credit lowered yields on international issuances, which in turn unleashed unprecedented levels of Brazilian debt to be issued on the international debt capital markets. According to Dealogic, between April 1 2010 and March 31 2011 $43.7 billion of international paper was printed by Brazilian issuers; JPMorgans share was worth $5.2 billion.
JPMorgan led Petrobras landmark three-tranche five-, 10- and 30-year $6 billion senior bond offering, which was the largest-ever debt transaction by a Brazilian corporate. It added the other corporate heavyweights of Vale and Gerdau as clients this year and led on debt transactions for a swathe of Brazilian financial-services companies, including Banco do Brasil, Itaú, Santander, Banco Safra and Votorantim. JPMorgan also brought first-time issuer BMF Bovespa to market with a $612 million deal in July 2010 and in October issued a $300 million perpetual for Cosan.
The best equity house award goes to BTG Pactual, which edges out the other Brazilian equities powerhouse of Credit Suisse. Both banks completed 21 deals in the qualification period worth almost $5 billion each, but BTG can claim to be the only bookrunner on the three best-performing IPOs this year: Mills (up 78% since offer), Julio Simoes (up 35%) and Brasil Insurance (33%). Many IPOs have struggled to price within their range, with sceptical investors focusing on the post-pricing performance especially for smaller deals.
BTG Pactual demonstrated its ability to provide the entire spectrum of equity financing and monetization to clients, closing IPOs, follow-ons, follow-ons with priority offerings and accelerated bookbuilds (ABB).
The Mills transaction is a good example of BTG Pactuals equity franchise in Brazil: it was selected to be the sole bookrunner on the companys $92 million ABB (the only ABB from a company that had its IPO this year) over the other IPO bookrunners, demonstrating both local execution capabilities and distribution.
Credit Suisse can take consolation for narrowly missing out on the Brazil equities house prize from yet again claiming the M&A award. It did more deals in the country than the other international investment banks, testament to its franchise both internationally and locally. It performed large, cross-border and transformational M&A deals and did important deals within the country. One example is within the healthcare industry: Credit Suisse advised MD1 on its sale to Dasa, the market leader in medical diagnosis. Dasa paid for the acquisition by issuing 82.2 million shares, representing a 26.4% stake in Dasa and worth at the time $1.5 billion, implying an EV/ebitda multiple post synergies of 8.1.
Best bank: Banco de Chile
Best investment bank: JPMorgan
Following an economic contraction of 1.7% of GDP in 2009, Latin Americas highest-rated economy grew at 5.2% in 2010, a higher than expected rate due to the public-sector investment of rebuilding after the February 2010 earthquake. Growth is expected to hit 6% this year before returning to more trend-like growth of 4.8%. The revenues of Chiles financial system are also expected to grow with lending, boosted by higher inflation and interest rates.
Banco de Chile (in which Citigroup holds a 30.85% indirect stake) wins the award for the countrys best bank for its particularly impressive results. It posted annual return on equity of 27.8%, higher than Banco Santander Chile and Banco de Credito e Inversiones, its nearest rivals (which together control more than half of Chiles financial system). In 2010, the banks market capitalization grew 53.3%, total revenues rose 13.9% to $2.5 billion and net income hit $809 million, an increase of 46.8%. In December 2010 the bank announced a capital increase of nearly $500 million to sustain this rapid pace of growth, the first stage of which was carried out on March 31 with the placement of 1.4 billion stocks at Ch$62 per share (worth $186 million in total). In a recent report, Fitch says Banco de Chile is well positioned to maintain this positive trend without taking excessive risks.
JPMorgan once again wins the award for the countrys best investment bank. It is the standout operator in the market, a leader in debt and M&A and active in a thin equities market. The banks domination of the Chilean debt tables is particularly striking, taking one-quarter of the market share of all transactions during the qualification period. JPMorgan led 10 international bond offerings during this period, including Chiles largest bond offering (Republic of Chiles $1.5 billion dual-tranche transaction), the largest non-sovereign bond (Banco Santander Chiles $1.2 billion three-tranche deal), the largest single-tranche corporate issuance (Cencosuds debut $750 million) and three other international debuts (Alsacia, Banco Estado and E-CL). In M&A, JPMorgan has been consistently the countrys leading adviser and in the past year advised CAP on its $900 million sale of a minority stake in its iron ore mining subsidiary Compania Minera del Pacifico to MCI (a subsidiary of Mitsubishi Corp). JPMorgan is also financial adviser to LanChile in its high-profile merger with Brazilian airline TAM.
Best bank: Banco de Bogota
Best debt house: Bank of America Merrill Lynch
The financial system in the regions newest investment-grade economy grew solidly last year, with almost all banks reporting healthy results. Banco de Bogota, the second-biggest bank in the country by assets and profits, is the pick of the bunch: assets grew 38.2% (to $20 billion) against an annual growth in the national banking system of 25.8%. The banks gross loan portfolio increased by 23.6%. Profits reached $99.8 million in March 2011, up 8.9% on the previous year. Return on equity was 23%.
As well as an impressive domestic performance, Banco de Bogota took an important step to becoming a regional force with its acquisition in December 2010 of BAC-Credomatic, a solid Central American bank with more than 50 years experience in nine countries across the region. Previously, Banco de Bogota had a presence in four countries in the Americas (the Bahamas, Colombia, Panama and the US). This $1.92 billion acquisition gives the bank additional coverage in the Cayman Islands, Costa Rica, El Salvador, Guatemala, Honduras, Mexico and Nicaragua.
Bank of America Merrill Lynch wins the award for the best debt house in Colombia, beating off strong competition from Deutsche Bank and JPMorgan. The bank was joint bookrunner on a $180 million-equivalent bond for EPM, Colombias largest public utility services company, as well as on a $620 million transaction for Bancolombia. In July 2010 BAML was joint lead on the Republic of Colombias local-currency bond ($500 million equivalent) and the bank is continuing to win Colombian mandates this year, being joint bookrunner on the $300 million bond for Grupo de Inversiones Suramericana.
Best bank: Banco del Pichincha
Banco del Pichincha is Ecuadors largest bank, accounting for 34% of the systems assets. Its recent performance has been driven by sustained loan growth (up 28%) and resilient margins (up to 7.2% of earning assets) that offset lagging non-interest revenues (8.4%). Revenue generation has been strong, up by 12.5% despite adverse regulation that curbed interest rates and limited commissions and fees. In the past year the bank recorded net income of $78.2 million, up from $12 million on the previous year.
Fitch says that the banks future revenue growth will greatly depend on its ability to cross-sell to its ample customer base to compensate for gradual regulatory tightening. Perhaps aware of the restrictions on domestic growth, the bank has opened a representative office in Spain and in 2009 bought Colombian bank Inversora. Revenues from overseas operations are still modest but add potential.
Best bank: Banorte
In November 2010 Grupo Financiero Banorte reached a merger agreement with IXE Grupo Financiero, adding acquisitive momentum to a bank already on the move: organic growth had already led to seven quarters of sequential improvements in profitability. Accumulated profits during the 12 months to the end of March 2011 were $6.9 billion, 19% higher than the previous year.
The merger with IXE appears to be a good strategic fit, providing Banorte with greater access to Mexico City, an area where it was previously under-represented, as well as more opportunities in premium and wholesale banking. Additionally, in 2011 Banorte reached an agreement with Cardtronics to integrate 2,000 ATMs in the banks existing network, which will offer customers access to one of the countrys largest ATM networks, more than 7,000 machines, by the end of 2011.
HSBC wins the award for best debt house in Mexico after doing the most, the biggest and the best deals. In February 2011 it was joint bookrunner on a $1 billion bond for the sovereign that priced with a new issue concession of just 10 basis points amid market volatility. In September 2010 it closed the lowest 10-year coupon for Pemex and in July 2010 it priced the lowest-yielding perpetual from a Latin American issuer (Pemex again).
HSBC was also joint bookrunner on America Movils first euro and sterling issuances in June 2010, establishing new benchmarks. It also brought deals to market for Grupo Bimbo (its first 10-year dollar-denominated bond) and a $1 billion bond for Cemex in January, which has enabled the issuer to continue its debt-refinancing programme.
The award for best equity house goes to Santander, which heads the Dealogic table with a 17.2% market share. Santander was the global coordinator of Fibra Unos $278 million IPO, the first Mexican listing of a real-estate trust, thereby opening a new asset class. The bank led the largest non-ADR IPO ever in Mexico with the $800 million offering of OHL Mexico, as well as leading on the IPO of World Sports Mexico. However, with the Mexican equity markets more active and a reported strong pipeline for the rest of 2011, this will be a far more competitive category in next years awards.
JPMorgan takes the award for best M&A bank in Mexico after working on recent standout deals in the country. The bank acted as exclusive adviser to IXE in its merger with Banorte to create the third-largest banking entity in Mexico. It also advised FedEx on its acquisition of Multipack, an important deal for FedEx and an example of regulatory-driven M&A (under the Nafta agreement). JPMorgan also advised El Puerto de Liverpool, Mexicos largest department store operator, in its acquisition of 50% of Regal Forest Holding, enabling the Mexican company to expand across Central America and the Caribbean.
Best bank: BBVA Paraguay
Paraguays financial sector enjoyed some strong tailwinds in 2010; the country benefited from the inward investment flows caused by Latin Americas relatively strong performance, as well as favourable weather conditions producing a bumper harvest for its important agricultural sector. GDP, which contracted by 3.8% in 2009, rocketed and in late 2010 hit an annualized rate of 14.5%.
The economic environment favoured all participants but none took advantage to better effect than BBVA Paraguay, which wins the best bank award. The year 2010 and early 2011 have been excellent for the bank, but also round off a strong five-year run, which has seen BBVAs Paraguay subsidiary quadruple its net benefit to $72.6 million.
The growth in the past year was particularly strong: the banks assets increased by 47.2% to help revenue growth of 27.4%. Net income rose by 34% and earnings per share increased by 40.3%.
Best bank: BBVA Continental
BBVA Continental is the second-largest bank in Peru in terms of assets, loans, deposits and branches, but in the past year achieved market-leading levels of efficiency and profitability. The bank had an efficiency ratio of 33.28%, a return on equity of 33.7% and a return on assets of 2.95%. The bank can also boast an impressive loan portfolio with non-performing loans of just 1.04% and has a coverage ratio of 396.5%, compared with the banking industry average of 245.6%. The banks capital adequacy ratio as of December 31 2010 was 14.65%, well above the Peruvian regulatory limit of 9.8%.
BBVA Continental is the only one of the top four banks in Peru to increase its market share in performing loans and deposits over the past 12 months, with loans increasing by 20.9% and deposits by 21.1%. The bank increased net income by 8.6% to $365 million, reflecting strong growth in its retail, middle-market and corporate loan portfolios, a result of the solid underlying performance of Perus economy.
Meanwhile, Bank of America Merrill Lynch had an excellent year in the countrys debt markets, winning a 44% market share twice that of second-placed Morgan Stanley. The banks deals include a $300 million new issue for Inkia Energy, as well as a NS250 million ($90 million) tender offer and consent solicitation for the same company. This is the first such offer successfully executed by a local borrower to refinance domestic debt via an international issue. It is also the first Peruvian tender with exit consents to modify the existing terms of the indentures. In November 2010 BAML was also joint bookrunner on the Republic of Perus $2.5 billion dual-tranche and dual-currency offering.
The award for best M&A house in Peru goes to Credit Suisse, which maintains its leading franchise by completing four Peruvian deals in the qualification period, more than any other bank. Credit Suisse advised InkaFarma on its sale to the IFH Retail Corp. The bank says this was the largest retail transaction in the past three years (although the value is undisclosed). The bank also advised the Peruvian government on the privatization of the Las Bambas copper project the largest single mining investment in Peru and a major political achievement for the countrys privatization programme.
Best bank: Santander Uruguay
Uruguays economic growth has been good in recent years and the country avoided entering recession during the economic crisis. GDP growth in 2009 slowed to 2.9% (from a regional best of 8.6% in 2008) but recovered to 5.5% in 2010. This economic growth has led to substantial increases in credit to the non-financial sector, although the loans share of asset ratio is still relatively low (31% in June 2010) and so the potential for growth is significant.
The Uruguayan financial system has recovered from a brief decline in 2009 to return to its upward trajectory, but profitability, hit by exchange-rate fluctuations and inflation, is low: private sector banks return on assets was 0.6% and the return on total equity was 6.6%. In this context, the award goes to Santander Uruguay, whose return on assets was 1.3% and return on equity was 12.1%.
The bank increased total assets to $4.4 billion from $3.8 billion in the previous year and net profits held up under pressure on profitability, slipping $7 million to $69 million. Nuevo Banco Comercial also deserves credit for returning to profitability in the past year (its net income was $13.6 million), bouncing back from negative earnings the year before.
Best bank: BBVA Banco Provincial
The Venezuelan economy finally came out of recession at the end of 2010, growing by 0.6% in the fourth quarter, following contractions of 1.4% and 3.3% in 2009 and 2010 respectively. Given the macroeconomic environment, the performance of BBVA Banco Provincial over the past year is remarkable: the bank grew total assets by 39.1% to $11 billion, which is largely due to the 41.1% growth of its net loan portfolio the highest among its peer group. Earning assets represented 70.2% of total assets and grew by $2.1 billion, mainly due to the contribution of the loan and investment portfolios, which represent 51.9% and 17.7% of total assets, respectively.
Total revenues rose 19.2% and net income grew by 15.8% to $378 million, the largest in Venezuelas financial system by quite a margin. As a result, the banks profitability ratios were again the best in the country, with a return on assets of 3.95% and return on equity of 36.89%. BBVA Banco Provincial also has the strongest equity ratio compared to its peers, comfortably fulfilling the 12% statutory requirement with 20.2%, implying a growth capacity 37% higher than its closest competitor.