Is there life beyond the P/E ratio?
The ambitious strategies of Scottish banks to resist being sidelined in European retail banking have recently attracted much attention, but their plans also extend to high-growth areas of the capital markets.
Responding to the boom in leveraged buy-outs in Europe, Bank of Scotland (BoS) and Royal Bank of Scotland (RBS) have formed their first ever joint venture, Caledonian Capital. Already well established in the middle tier of the leveraged market (deals between $10 million and $100 million in size), the banks aim to use Caledonian Capital to position themselves as providers of loan financing in larger buy-out deals.
With the current influx of private-equity money into Europe showing no signs of slowing down and more international deals being done, the average size of LBO deals is increasing. "We felt that there was a very good living to be made in this market," says Leith Robertson, head of leveraged finance at RBS. Although both RBS and BoS are considered "major and sustainable players in middle-market senior debt, sometimes we are considered to be not up to major deals," says Robertson.