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The major concern remains consolidation. Deutsche Bank advances across the continent. Citigroup marches on. Goldman Sachs pips Morgan Stanley in M&A. Peter Lee

AUSTRIABest bank: Bank Austria Best foreign bank: Deutsche Bank Best domestic equities firm: CA IB Investmentbank Best foreign equities firm: Deutsche Bank Best domestic bond house: CA IB Investmentbank Best foreign bond house: CSFB Best domestic M&A adviser: CA IB Investmentbank Best foreign M&A adviser: Merrill Lynch When Bank Austria acquired its strongest domestic rival, Creditanstalt, in 1998 it created by some distance the largest and most powerful bank in Austria. The bank has undergone a remarkable transformation over the past decade from being a small municipal savings bank to a significant international bank headquartered in Austria, with a powerful network across central and eastern Europe. At the end of last year its total assets stood at e136 billion, compared with e56 billion for its nearest domestic competitor, Erste Bank. With a share of the domestic corporate banking market that analysts put at around 25%, the bank is the country's clear leader in wholesale and retail banking. By contrast, its largest domestic rival, Erste Bank, counts its main strengths in retail banking as well as in serving the wholesale needs of the country's savings banks through GiroCredit, with which it has merged. Bank Austria claims to have business relationships with two-thirds of Austria's top 500 companies. The bank is strong in cash management and payment services, electronic payments and treasury services as well as in local and cross-border debt and equity capital raising. It operates all of these services within Austria and has extended them across central and eastern Europe, the region that has become a key strategic focus for the larger Austrian banks, which fear their growth prospects will be constrained by the small size of the domestic economy. It runs a large forex trading operation and corporate service desk, dealing in the world's leading currencies - the dollar bloc, euros, sterling, yen, Swiss franc - and is a leading market-maker in the currencies of central and eastern Europe. In January, this year it opened a forex management desk for its customers, enabling them to place currency trading orders 24 hours a day. Bank Austria is also a strong retail bank, with some 1.6 million retail customers in Austria amounting to 23% of the market. It claims a 28% share of Austria's top-tier private banking clients and it hopes to use the combined Bank Austria and Creditanstalt franchises to make further inroads in the Austrian private banking market. In a country where banks have been a little slow to adopt the internet, Bank Austria has seized on this opportunity. Its website is the most popular banking website in Austria and the bank doubled its online customers from 1998 to the end of 1999, reaching nearly 200,000. Bank Austria has recently launched an online securities information service, broker.net, and is negotiating joint offers with a leading domestic internet service provider to bundle for customers a package of internet access and online banking. The investment banking arm of Bank Austria, CA IB Investmentbank, has translated the bank's leading position with corporate customers into the investment banking sphere. Its Austrian corporate finance team is the leading domestic M&A adviser. It advised Austria Tabak on the e538 million acquisition of the cigarette division of Swedish Match, one of the largest ever foreign investments by an Austrian company. It also advised Telekom Austria on its acquisition of a key strategic 25% stake in Libro, which paves the way for the two companies to devise a common internet strategy. Its central and eastern European presence has helped it serve the needs of Austrian companies. It advised an Austrian consortium led by Frantschach on the takeover of Conifer a Dutch company floated on the Budapest stock exchange. It also advised the Bulgarian government on the sale of petroleum assets to an Austrian consortium led by OMV last July. In equity capital markets, CA IB is a leader in arranging Austrian privatizations and corporate IPOs as well as secondary offering of equity. Highlights in the last year include acting as global co-ordinator in a capital increase by Austrian Airlines and jointly winning with Goldman Sachs a mandate from the Austrian privatization agency to dispose of 2 million shares of Austria Tabak in a block trade. CA IB also advised Yline, the first Austrian internet stock to go public, on its IPO and co-lead managed the IPO of Salzburg-based crane maker Palfinger. Its equity trading unit based in Vienna is a leading market maker on the Vienna stock exchange for Austrian equities and equity derivatives and is a member of the Frankfurt stock exchange and a founding member of Easdaq. Its research analysts have recently striven to upgrade coverage of new economy companies, not traditionally a large group on the Austrian market, through its Growth and Technology Analyzer which brings together coverage of stock listed in Vienna, the Neuer Markt in Frankfurt and Easdaq in Brussels. Acting within the bank's group treasury team, the debt new issues team is one of the busiest in Austria, leading the largest number of international bond deals for Austrian issuers. Many of these are for the bank's own funding in euros and central and eastern European currencies. Such funding is a large task for the treasury of Bank Austria now that it has grown to a size where it is essentially Austria's leading stock. The treasury is also a regular lead manager and co-lead manager of deals for issuers from central and eastern Europe and for issuers from outside the region selling local currency bonds. The consolidated Austrian banking sector offers little room for foreign banks, though Deutsche Bank is long established. In corporate banking it claims business partnerships with 200 of Austria's leading 500 companies. It provides key transaction services including global cash management to these as well as to the Austrian subsidiaries of several leading multinationals and to certain Austrian banks. On the upper end of retail banking, Deutsche has enjoyed considerable progress in private banking in Austria in the past 12 months, partly thanks to the strong performance in discretionary portfolio management. It has increased its private banking customers to 3,300 and opened its fourth private banking centre in Austria at Graz. It has been the most successful foreign bank in selling its own investment funds to Austrian investors. Deutsche Bank claims a 7% share of equity volume on the Vienna Stock Exchange, and it processes some 25% of all agency business on the stock exchange, primarily for international and local institutions. The closely followed Reuters Survey 2000 ranked it number one for research and execution in Austrian equities. CSFB, which like Bank Austria aims to build the pre-eminent investment banking network in central and eastern Europe, heads the league tables as the leading bookrunner of international bond deals for Austrian issuers. Merrill Lynch ranks as the most active foreign adviser on M&A deals involving either an Austrian buyer or seller.

BELGIUMBest bankL KBC Best foreign bank: ING Best domestic equities firm: Petercam Best foreign equities firm: Fortis Bank Best domestic bond house: KBC Best foreign bond house: Fortis Best domestic M&A adviser: Petercam Best foreign M&A adviser: Morgan Stanley Dean Witter KBC operates now as the leading Belgian domestic bank, following the acquisitions in recent years of its two largest Belgian rivals by Dutch financial services giants repositioning themselves as leaders in the wider Benelux market. So Belgium's Banque Bruxelles Lambert was acquired by ING in 1998 and Fortis acquired a second large Belgian bank, Generale Bank following a tussle with ABN Amro. And even KBC may eventually go the same way. Rumours of a possible tie-up with Rabobank continue to wax and wane. "If you don't count BBL and Generale, then KBC is the only significant domestic competitor left," says the country head of one large non-Belgian bank. "But that means our competition has actually become a whole lot tougher. We used to be one of the few big foreign banks in town. Now that Belgium is being bought by outsiders, our competitors include foreign-owned banks with more resources, more products and strong traditional ties to Belgian clients." KBC was formed by the three-way merger in 1997 of Belgium's then second largest bank, Kredietbank, with Belgian mutual bank Cera and insurer ABB. Today KBC is owned by a Belgian holding company, Almanij, the vehicle for a group of wealthy Flemish families that is itself quoted on the Brussels stock exchange. KBC's network of 1,539 branches is concentrated in the northern Belgian region of Flanders, home to 6 million people, where it dominates almost every segment of banking and insurance. The bank has a total share of loans in the Belgian banking system of around 24% and a very slightly higher share of deposits. It has total assets of e156 billion ($162 billion) and it accounts for some 9% of the total capitalization of the Bel20 index of leading Belgian companies. KBC continues to seek further cost savings from the merger with Cera and ABB and also aims to further push cross-selling of insurance and banking products to Belgian customers, something not previously prevalent in the country. Kredietbank had a long tradition of being a strong trading bank, and is now increasing its commission revenue. The benefits of the merger are just beginning to be felt, with consolidated net profits for 1999 being reported this April as showing a 21.6% increase on 1998. Banking still accounts for 72% of these profits, with retail banking accounting for just over half the group's profits and corporate banking, asset management and corporate banking the rest. The bank has recently announced a target of 20% of its customers operating online from 2002. KBC-Online will be available this month, Offering, among other services, brokerage, mutual funds and possibly mortgages. Uncertainty lingers around the future of KBC. The bank has said it is open to talks with other European partners; it was recently approached by Italy's Monte dei Paschi di Siena and the rumours of talks with Rabobank won't go away. Among the foreign banks that are active in Belgium, Deutsche Bank has progressed this year after completing the acquisition of the Belgian network of Crédit Lyonnais, giving it 31 branches in Belgium and a larger share of the retail market than any foreign bank other than those traditional Belgian banks recently acquired by the Dutch. Deutsche also managed several notable capital markets financings for Belgian names in the past 12 months. Citibank too would normally merit attention for its combination of a strong consumer banking presence in Belgium, its traditional strengths in cash management and transaction services for Belgian companies and the financing of such deals as the groundbreaking $600 million US leveraged lease it arranged for Electrabel. Within the ING Group, ING Belgium, which combines BBL and the old Belgian banking and insurance subsidiaries of ING, operates as ING's second domestic base after the Netherlands and counts as one of five key divisions of the bank. BBL's core activities cover retail banking, corporate and institutional banking, Financial markets and investment banking and asset management and private banking in Belgium. It has long been recognized as a well-managed corporate bank, especially in the French-speaking part of the country. The former head of BBL, Michel Tilmant, was appointed chairman of ING Bank at the start of this year. Meanwhile BBL operates 995 traditional branches in Belgium, plus 525 fully automated SelfBanks. Its corporate banking is organized through 20 commercial local head offices across the country. It has been something of an innovator, for example arranging one of the First dematerialized Belgian commercial paper programmes to benefit from international placement, for SCA Group. In the Belgian bond markets, Fortis, which includes the old Generale Bank, remains a clear leaders in both the trading of public sector Belgian bonds, according to Euromoney's own bond trading poll released in May, and also one of the busiest lead managers of international bonds for Belgian issuers, mainly on behalf of its Belgian treasury operations. KBC is the top-ranked domestic trader of bonds according to our May poll. Fortis has also made its mark as a lead manager of equity deals for Belgian issuers, although the clear and long-standing leader in Belgian equities, noticeably for the quality of its research coverage of Belgian stocks and additionally for the quality of its brokerage execution, according to Euromoney's most recent poll of over 300 European equity fund managers, is Petercam, which combines both close contacts with quoted Belgian companies and an ability to analyze them through comparison with their international peers. Petercam remains the largest independent member of the Brussels bourse, with its capital controlled by the firm's active partners. Petercam also has a strong corporate Finance arm and is a leading adviser to Belgian companies on mergers and acquisition deals including, public bids, buy-outs and, as an alternative to such trade sales, on IPOs. One of the highlights of last year was advising local company Havelange on the sale of its forklift truck business to European leader Lex Service. Morgan Stanley has been the most active foreign M&A adviser on deals touching either Belgian buyers or sellers. It has long been a leader in the Belgian market, advising on the mergers that created Fortis and KBC, and it played a key role in the bringing together of TotalFina and Elf Aquitaine, the European oil giant that comprises French and Belgian companies.

FINLANDBest bank: MeritaNordbanken Best foreign bank: Citibank Best domestic equities firm: Evli Securities Best foreign equities firm: Enskilda Securities Best domestic bond house: Leonia Best foreign bond house: Schroder Salomon Smith Barney MeritaNordbanken - now under the ownership of a holding company temporarily named Nordic Baltic Holdings, which holds both the banking operations of MeritaNordbanken and the insurance operations of Tryg-Baltica - is the largest bank in the Nordic region by any measure. In Finland, Merita Bank had clearly reached the limits of its possible growth when it came up with its pan-Nordic and Baltic strategy with Nordbanken in 1998. In Finland, Merita has a 40% plus share of the local banking market and around 30% share of the life insurance market. It is widely recognized to be a world leader in taking retail banking online and internet penetration for Finnish customers stands at over 50%. It still faces some competition from mutual banks in the mortgage market. And Merita is just beginning to succeed in importing into Finland the mutual funds that Nordbanken has sold with great success in Sweden. It is also a leader in corporate banking and Finance, including project and trade Finance and lending to larger and even smaller-sized Finnish companies. In the Finnish corporate sector its leadership is even more pronounced than in banking overall in Finland. Merita has a 55% share of business banking in Finland. "Leonia is probably a decent second, but it is quite a bit smaller than Merita," notes the head of one foreign bank operating in Helsinki. "Merita is very strong and its dominance carries right down from dealing with the leading Finnish corporates through the mid-market." For the moment, MeritaNordbanken's attention is focused on trying to realize its pan-Nordic ambitions. Last year it added a third leg to its Swedish and Finnish dominance, by acquiring Unidanmak in Denmark. Signs for its integration look promising, as Unidanmark's CEO, Thorlief Krarup, will take over in 2001 from Hans Dalborg,. the incumbent CEO of MeritaNordbanken. More problematic has been the bank's long-running effort to persuade the Norwegian government and parliament to allow it to acquire control of Christiania Bank. This is rumbling towards resolution. Among the foreign banks, Citibank is a leader and is clearly benefiting in wholesale markets from the combination with Schroder Salomon Smith Barney which has a long-established franchise among Nordic bond issuers and has been the leading arranger for Finnish borrowers in the past 12 months. Together Citibank and Schroder Salomon Smith Barney concentrate coverage on the top 35 corporate and financial institutions in Finland. Indeed within Citigroup in Europe, Finland provides one of the better examples of Citibank and SSB coming together. While Citibank recently won the mandate for Metsa-Serla's euro cash management business, SSB led the First euro corporate bond for Metsa-Serla after the creation of the euro. More recently this April, it was a joint lead on the inaugural e1 billion bond issue for Sonera launched through the EMTN programme the company set up last November. Citibank was also appointed joint lead, alongside Merita, on the e650 million acquisition financing for Huhtamaki's acquisition of Dutch packaging group van Leer. It also arranged a e1.5 billion syndicated loan for Fortum to purchase the power assets of Stora-Enso, one of the largest ever loans for a Finnish corporate. Citibank underwrote the whole amount before bringing in four co-arrangers. It is also seeing increased business in forex and forex options in Finland, partly as a result of being asked to hedge foreign exchange risk on cross-border acquisitions. Among domestic banks, Leonia and its corporate Finance team has been one of the more active arranging bond deals for Finnish issuers, including several securitizations as well as arranging floating-rate funding for its parent bank. In Finnish equities, among the domestic firms Evli Securities scores highly for its research, especially of new economy companies and has a leading share in secondary market turnover. Evli Corporate Finance has arranged a larger number of new issues of equity for Finnish companies than any other firm, albeit mainly smaller deals. Among the foreign Firms active in the Finnish equity market, Enskilda Securities traditionally fights it out with Alfred Berg for pole position. Enskilda has made strong progress since opening up in Helsinki Five years ago. Last year it scored a notable success as joint arranger of the IPO for Perlos, a manufacturer of cases for mobile Firms with strong ties both to Ericsson and Nokia. In a volatile market, the stock has fared well, rising from e8.5 at issue to as high as e50 before falling back to around e40. Enskilda was able to get away a follow-up offer in the form of a e170 million block trade executed over two days in February by one of Perlos's founding shareholders. It has the mandate for an IPO of the Finnish subsidiary of ICL and in March raised $226 million in a private placement of equity for ICL Data sold mainly to Finnish institutions. Enskilda has led a number of the most intriguing IPOs this year, including the First public offer for shares in a Finnish online securities broker, a e69 million placement for eQ-online. Enskilda also arranged the e53 million offer for data security company Data Fellows and the e62 million IPO for brewer Hartwall with which it plans to Finance its expansion in Russia.

FRANCEBest bank: BNP Paribas Best foreign bank: Deutsche Bank Best domestic equities firm: SG Global Equities Best foreign equities firm: CSFB Best domestic bond house: BNP Paribas Best foreign bond house: Deutsche Bank Best domestic M&A adviser: Lazard Best foreign M&A adviser: Morgan Stanley Dean Witter Last year's merger fiasco was in many ways unsettling and unsatisfactory for all parties in French banking, but it did at least bring together a leading French corporate and retail bank and the country's leading international investment bank. BNP Paribas is the largest bank in France. As the new century dawned it was the fourth-largest bank in the eurozone, ranked by market capitalization. Analysts estimates it has over 9% market share of loans in the French banking system, putting it very close to its two leading rivals, Crédit Lyonnais and Société Générale. One asset that sets it apart is chairman Michel Pébereau who is widely regarded as one of the best young leaders in European banking. He has set about overhauling a bank traditionally seen as second best to Société Générale. In E-Cortal, it has the leading internet broker in France, one that now has credible European ambitions. And in Cetelem, it boasts a leader in European consumer Finance. Paribas also brings its traditional strengths in fixed income. The country head of one of the large foreign banks in Paris that competes for mainstream French corporate business suggests: "Last year we certainly detected that BNP Paribas was working through the merger issues and gathering momentum, while Société Générale remained in a state of shock and has struggled to come back with a convincing strategy in wholesale banking." BNP Paribas' strengths in French corporate banking are in traditional wholesale businesses like bilateral and syndicated lending, and it is also a leader in certain transaction and securities services such as clearing and custody. In the last 12 months BNP and Paribas have led some notable international bond deals for French issuers including ones for Suez, Lyonnais des Eaux, Alstom, Carrefour and Rhône-Poulenc. Competition among foreign banks in France is keen. The leader is Deutsche Bank which performed strongly in the past 12 months across a range of businesses. Its global banking division played a key role in several high-profile transactions, including co-arranging a e18 billion loan for Elf Aquitaine; arranging the £1.7 billion acquisition Financing for Thomson's takeover of Racal; sole arranging a £1 billion bridge loan for Danone's takeover of United Biscuits; and acting as senior co-arranger on takeover Financings for Lafarge, Air Liquide and Saint-Gobain. It has also closed several large project Financings for French sponsors in Latin America and Asia. Deutsche Bank has won cash management mandates in the last 12 months from Infogrammes, Giraud and Saint-Gobain. It has improved its position in providing forex services to French clients and enjoyed a marked rise in market share. Deutsche is also a clear leader in French bonds. French treasury statistics show it has the top market share among 20 primary dealers in French government bonds with over 10% of the market. It is the top dealer in the key benchmark sector of 11 to 30 years' maturity and ranks second in trading Five- to 10-year bonds. It played a key role in the First issue of inflation-linked bonds by the treasury. In capital raising, it was recently appointed joint lead manager on e5 billion worth of FRNs issued by France Télécom. Deutsche has been joint lead manager on a long list of French issues for borrowers including Lafarge, RATP, Caisse Nationale des Autoroutes and Compagnie de Financement Foncier. The bank has also arranged a number of EMTN programmes for French borrowers, including Dexia, LVMH and Compagnie de Financement Foncier. In equities, the key challenge for leading French brokers, including leading independents such as Exane and those run by the banks such as Crédit Agricole Indosuez Cheuvreux and SG Global Equities, has been to meet the growing requirement of French institutional investors for coverage of non-French stocks. SG Global Equities is highly rated for its execution capability in French stocks. It is also building a larger pan-European and even global coverage in certain sectors such as technology. This breadth makes the Firm better able to serve French investors with non-French stocks as well as to put analysis of French shares in an international context. SG also has a strong position in equity derivatives, but what really distinguishes it from French rivals is an ability to lead manage international equity offerings by French companies. It was global co-ordinator on a e400 million Offering for Thomson Multimedia late last year and also ran the books on offerings from Usinor, Dexia, Fimatex and Infogrames. CSFB is the top foreign arranger of French equity deals, both for large companies such as Rhodia and ST Microelectronics and smaller issuers on the Nouveau Marché. In mergers and acquisitions, Morgan Stanley's strong showing owes much to its role in the Elf Aquitaine/TotalFina deal. Lazard is as ever a force to be reckoned with in M&A in its own backyard. It acted as adviser to Elf.

GERMANYBest bank: Deutsche Bank Best foreign bank: Citibank Best domestic equities firm: Deutsche Bank Best foreign equities firm: Goldman Sachs Best domestic bond house: Deutsche Bank Best foreign bond house: UBS Warburg Best domestic M&A adviser: Deutsche Bank Best foreign M&A adviser: Goldman Sachs Deutsche Bank remains Germany's largest and most powerful bank, its position seemingly unchanged following the aborted merger deal with Dresdner this April and the collapse of its attempts to further rationalize its domestic retail network in partnership with Dresdner and Allianz. Deutsche enjoys a stronger position in Germany in wholesale and corporate banking, with a market share analysts estimate at 15%, than in domestic retail banking where analysts put its share of the fragmented and over-banked retail market at 5%. Its domestic headache will remain for the foreseeable future how to produce a decent return from retail banking operations in a country where thousands of quasi-public sector savings banks and co-operative banks continue to lend without the same imperative to produce returns that the private sector banks face. The attempted merger with Dresdner and asset-swap with Allianz, though ill-executed when the plans became public earlier than intended, was at least an effort to address this. Meanwhile the integration of Deutsche's retail branch network with its direct bank into Deutsche Bank 24 suggests that the bank will continue to look at ways to address this problem. It remains to be seen what will be the fate of DWS, Deutsche's highly regarded fund management arm, which the bank was prepared to transfer to Allianz. Wholesale successOn the wholesale banking side, the picture is much brighter. "There are some strong banks in Germany, and HypoVereinsbank does a great job in its region," says one foreign banker in Frankfurt, "but Deutsche bank is head and shoulders above the rest. Right across the board, Deutsche has the corporate side covered." And that's been quite a challenge, because German companies have shown themselves perfectly willing to look beyond their historical relationships with German banks and use international competitors for important services, such as M&A advice and debt and equity capital raising. Deutsche Bank has fought back. Its attempts to turn itself into a global investment bank have not been driven solely by a sense of international ambition, but by the need to meet the more testing requirements of its customer base at home. Since the introduction of the euro in 1999, Deutsche has been making ever more pronounced efforts to modernize its approach to wholesale banking, seeking where possible to introduce German corporate clients to the capital markets, rather than simply lending them money. It has also become a much more active manager of its own balance sheet. The bank continues to concentrate on its relationships with German companies large enough to enter the capital markets, as it seeks to transform itself into a global investment bank. Deutsche Bank is by a very large margin the number one trader of government bonds according to Euromoney's poll published in May. It is by far the leading arranger of bond issues for German borrowers, leading more than 300 deals over the past 12 months according to Capital Data Bondware. It is the bank most often chosen by leading German corporates to arrange their benchmark bond issues and played leading roles in large deals for Mannesmann, DaimlerChrysler, Heidelberger Zement and Linde. It is also a leading Pfandbrief trader and leading arranger of large bond issues for the many German banks that fund in the capital markets as well as for state governments and public sector borrowers. Among the foreign banks, UBS Warburg has also been very busy in the last 12 months leading international bond deals for many German banks and public sector borrowers, as well as corporate deals for Deutsche Bahn, Deutsche Telekom, Rhodia, Mannesmann, Allianz and Bayer. Deutsche has also made progress this year as a provider of other traditional wholesale Financial services to German institutions. It has won pan-European cash management mandates from several German multinationals, including Adtranz, BASF, Corus, DaimlerChrysler and Porsche. It is also the pre-eminent forex bank in Frankfurt. In German equity markets, Deutsche narrowly beats Dresdner Bank according to Euromoney's poll of European equity fund managers who rank those two as the leaders in research. They put Deutsche slightly ahead in quality of execution. Deutsche also topped the recent Reuters 2000 ranking for best research house in Germany. The bank's equity capital markets team has also improved its performance beyond all recognition in the past few years and Deutsche now regularly is appointed a global co-ordinator on large equity deals for German companies, playing that role on substantial offers over the past 12 months from Infineon Technologies, Deutsche Telekom, Linde, and Allianz, as well as running the books on deals for Mobilcom, ELMOS Semiconductor and several others. The leading foreign investment bank to act alongside Deutsche - and often Dresdner - on large equity offerings from German companies is Goldman Sachs, which has built up a sizable investment banking business in Germany in recent years. Goldman worked alongside Deutsche and Dresdner on the second and third offerings of shares in Deutsche Telekom and it partnered Deutsche on the highly successful e6 billion Infineon deal, which enjoyed a surprisingly strong reception in the grip of a bear market. Goldman then partnered Dresdner Kleinwort Benson in yet another large German equity Offering that met difficult market conditions, the e2.9 billion offer for T-Online. Goldman's strong corporate Finance and investment banking franchise in Germany was initially built by Paul Achleitner, who oversaw the stunning breakthrough when Goldman advised Daimler-Benz, which is closely connected to Deutsche Bank, on its merger with Chrysler. He recently left to take up a position at Allianz where he will be charged with engineering a restructuring of the insurance company's industrial holdings that may well spread throughout Germany. Goldman will no doubt get its fair share of the mandates, having shown itself able to work both for and against German companies, most recently advising Vodafone on its takeover of Mannesmann. "Goldman has a very strong M&A franchise and has done wonderful work for its clients," admits one German banker. Among the German banks, Deutsche has finally realized its weakness compared with the Wall Street Firms in M&A and is beginning to build up and pick up mandates. Among the foreign banks in Germany, Citibank, now increasingly working in partnership with Schroder Salomon Smith Barney, offers a powerful combination of services. It is the top-ranked foreign bank in Germany for foreign exchange and 80% of the large globally active German companies use Citibank for their forex dealing. And over half Germany's multinational companies also use Citibank's cash management services either regionally or across the world. Clients include Hoechst, VW, BMW, DaimlerChrysler, Veba, Bosch and Merck. It is a key lender, recently sole-arranging a $2 billion credit for BASF. Combining these traditional banking abilities with Salomon Smith Barney's and Schroder's investment banking and M&A skills is making Citigroup one of the more powerful groups at the centre of German banking. Its ability to arrange all forms of Financing have made it a partner of choice for venture capital Firms making acquisitions in Germany, having advised and arranged Finance in the past 12 months on large acquisitions by Callahan Associates, Kohlberg Kravis Roberts and CVC Capital Partners as well as advising large German corporates including Deutsche Telekom and VAW Aluminum on acquisitions outside Germany.

IRELANDBest bank: Allied Irish Banks Best foreign bank: Citibank Best domestic equities firm: Davy Stockbrokers Best foreign equities firm: Merrill Lynch Best domestic bond house: Davy Stockbrokers Best domestic M&A adviser: Davy Best foreign M&A adviser: NM Rothschild Allied Irish Banks is marginally the larger of the country's two dominant commercial banks, with a share of loans in the Irish banking system of around 27%, slightly ahead of Bank of Ireland, its nearest rival. As the Irish economy has grown strongly in recent years so AIB has been growing Irish loans at almost 30% a year for the past three years and has managed to do so apparently without incurring above normal problem loan exposures. While it grew loans by 25% last year through its Irish bank network, with a 22% increase in residential mortgages, it managed this on an average loan to value ratio of just 53% and an even more conservative 49% in the frothy Dublin property market. And AIB continues at the forefront of technological innovation in Ireland, moving beyond e-commerce into m-commerce. Its latest Offering allows Irish consumers in the highly competitive mortgage market to check mortgage rates and ask questions about mortgage availability via their mobile phones. The bank has also been growing its domestic life businesses. And AIB's substantial capital market business has also fared well in the last year. AIB scored a notable success on the corporate Finance side by acting as adviser to the Irish government on the IPO of Telecom Eireann last year and has since followed this up with additional advisory mandates for the public and private-sector entities. It has specialist groups pulling together services for Irish government organizations, top-tier corporates and multinationals operating in Ireland and has additional industry groups covering food and agri-business; retail, energy and manufacturing. It offers all forms of short-term and long-term lending and credit, including project and acquisition Finance, asset Finance and leasing, electronic cash management and corporate treasury services. "While Bank of Ireland is quite aggressive in select areas such as treasury and funds administration, I find that AIB is very much the stronger competitor in many more areas of corporate and wholesale banking. AIB is getting better and it's very aggressive. It is also very strong in investment banking on the domestic side now," says the head of one large bank in Dublin. Among the foreign banks in Ireland many, such as Chase, Bank of America, ABN Amro and Citibank, have been attracted by the International Financial Services Centre in Dublin, which has drawn both investing funds and corporate treasuries as well as the banks that serve them. Citibank stands out here, serving large Irish companies, Irish subsidiaries of multinationals and Financial institutions in the IFSC. It claims to have arranged $1 billion worth of structured Financing transactions for IFSC-based Financial institutions in 1999. The bank has also won a large number of custody, cash management and depositary mandates from Irish-based funds and treasuries. It was appointed global custodian for the Coras Iompair Eireann's e1.4 billion pension fund and was appointed ADR depositary bank for Eircom in connection with its NYSE listing. It is adding about 40 cash management clients a year for international treasuries run out of Dublin and provides fully outsourced treasury to 80 customers. Meanwhile its efforts to raise its profile with large Irish companies have been helped by the integration with Salomon Smith Barney, which was appointed international adviser to the Irish government last year on the Aer Lingus IPO and was also appointed international broker to Kerry Group. The leading Irish domestic equity Firms include the stockbroking subsidiaries of the two big banks: Goodbody, part of the AIB group and Davy Stockbrokers which is ultimately owned by Bank of Ireland. Both are strong but Davy takes top spot, heading Euromoney's polls for its research and execution in Irish equities. The company claims to have a dominant domestic market share, accounting for between 35% and 40% of daily trading volume in Irish equities, being broker to companies accounting for 65% of Irish stock market capitalization and being involved in some 70% of funds raised on the market in the past Five years. It is also a top bond house. Merrill Lynch took the lead role in the equity issue for Telecom Eireann last year. Davy has also been increasing its corporate Finance capability as an extension of seeking to advise Irish companies on listing and fundraising. Increasingly it advises on mergers and acquisitions, restructurings and valuations and venture capital sourcing. NM Rothschild tops the league tables of foreign advisers on M&A deals involving Irish acquirers or targets.

ITALYBest bank: Banca Intesa Best foreign bank: Deutsche Bank Best domestic equities firm: Banca IMI Best foreign equities firm: Merrill Lynch Best domestic bond house: Caboto Best foreign bond house: Merrill Lynch Best domestic M&A adviser: Mediobanca Best foreign M&A adviser: Lehman Brothers For much of 2000 the leaders of Italy's main banks have been struggling to come to terms with the fallout from an extraordinary series of attempted mergers - many of which failed, a few of which succeeded - which further transformed the banking landscape last year. UniCredito Italiano attempted to take over leading corporate bank BCI and also BNL, while Sanpaolo IMI went for Banca di Roma and Banco di Napoli. Neither was successful, though Sanpaolo IMI may yet acquire Banco di Napoli. These two offers had followed quickly from yet another failed deal: the attempt to negotiate a merger between BCI and Banca di Roma, which ultimately foundered when successive leaders of BCI refused to join themselves to a bank with such a problem-filled loan book without clear control, and the leaders of Banca di Roma refused to submit to this condition. This project had been prompted by Mediobanca, ever the driving force in Italian corporate Finance and especially so in bank mergers. Italian banks including BCI, UniCredito and Banca di Roma are large shareholders in Mediobanca itself. Having lost influence over one of these core shareholders, UniCredito Italiano, under the increasingly independent leadership of a modernizer, Alessandro Profumo, Mediobanca had hoped to consolidate ownership of its shares in friendly hands. Another leading Italian bank, Sanpaolo IMI, Mediobanca's leading rival in Italian capital markets and corporate Finance, had also expressed an interest in BCI. Behind-the-scenes manoeuvring among Italian banks last year was feverish and convoluted. UniCredito and Sanpaolo IMI together announced on the same day their offers for BCI and Banca di Roma, so splitting Mediobanca's favoured merger partners. Ultimately Mediobanca thwarted their attempts and eventually engineered a merger between the now much sought-after BCI and Banca Intesa, itself a federation of mainly retail banking franchises including Cariplo and Ambroveneto. This merger was clinched last October. (For a fuller explanation of these manoeuvrings see Euromoney November 1999 cover story). Banca Intesa, which wins our award as best bank in Italy on the strength of its constituent parts, later announced its intention to dispose of the Mediobanca stake. Since the completion of the merger, the new bank has struggled to move beyond its federal holding structure of existing bank franchises and begun to reorganize into business divisions, splitting retail banking, private banking and corporate banking. It is just embarking on this initiative, which will take four years to complete and requires, among other things, adopting a single IT system, probably that of the old Ambroveneto, which has long been one of the better-managed Italian banks and whose former leader Giovanni Bazoli is now chairman of Intesa and runs the bank with chief executive Carlo Salvatori, former head of Cariplo. The two have shown themselves to be low-profile but shrewd operators in the continuing consolidation of Italian banking. Clearly, the old BCI will provide the cornerstone of the corporate banking effort. BCI has a proud tradition of leadership in corporate banking and capital markets in Italy with an ability to deliver complex Financial products backed by strong managers throughout the bank. It has also long been a leading force in Italian bond issues on the international markets. Its capital markets arm Caboto led large deals for Fiat and Parmalat last year as well as for a host of Italian banks. Caboto also just pipped UniCredito, Deutsche Bank and Sanpaolo IMI as the leading Italian government bond trader according to Euromoney's annual poll published two months ago. Banca Intesa can now boast clear leadership in the Italian banking market with roughly 17% of loans and deposits, compared with around 11% for UniCredito and 7% to 8% for Sanpaolo IMI, its nearest competitors, which had both clearly been keen to get their hands on BCI. Intesa is close to being a national bank - though it remains stronger in the more prosperous north it has operations in many of the southern regions of Italy. Intesa also boasts a 20% share of the mutual fund market in Italy, higher than any of its competitors. It has recently developed new online services including IntesaTrade and a funds supermarket in partnership with Lipper. Deutsche Bank is the leading foreign bank in Italy in both consumer and wholesale banking. It has a network of 260 branches with 500,000 clients and also owns one of the country's leading retail fund management groups, Finanza&Futuro. In wholesale and corporate banking it has been successful in transaction services in the past 12 months, winning cash management mandates from Fiat, Enfin and Bulgari, and it has also arranged funding for Italian borrowers including leading bond deals for Fiat and the Republic of Italy. In Italian equities Sanpaolo IMI wins high marks in Euromoney's poll of fund managers for the quality of its research and has also been a leading arranger of international equity offerings for Italian companies, acting as global co-ordinator or bookrunner in the past 12 months on deals for Acea, AS Roma, Tiscali and Autostrade. Although UBS Warburg gains strong marks for its Italian research, Merrill Lynch scoops the award for best foreign equities Firm largely on the back of its leadership in large international equity offerings, most notably the huge Offering last October in shares of oil giant Enel. Merrill is also the leading foreign bond Firm in Italy mainly on the back of a string of new issues including groundbreaking deals for Italian regional borrowers such as Sicily, Abruzzo and Liguria, as well as larger bond deals from Enel, Fiat and several Italian banks. Mediobanca remains the master of Italian M&A, with its shaping of Italian bank mergers just one example of its remaining far-reaching influence in the past 12 months. Lehman Brothers was another key adviser on Italian M&A deals in the past 12 months, including the Intesa-BCI deal. It has a strong track record in Italy long predating its work on the groundbreaking Olivetti takeover of Telecom Italia where it also worked alongside Mediobanca.

LUXEMBOURGBest bank: Banque Internationale à Luxembourg Best foreign bank: Citibank All 211 banks in Luxembourg are foreign-owned so for the purposes of these awards Euromoney has singled out one eurozone bank operating in Luxembourg and a bank from outside the eurozone. Banque Internationale à Luxembourg, now part of the Franco-Belgian Dexia group, is the oldest bank in the Grand Duchy and a leader in the key Financial services businesses conducted there, namely private banking, asset management and funds administration. Dexia has concentrated its assets under management in Luxembourg and these now amount to e40 billion. Banque Internationale à Luxembourg has thus become the key vehicle through which Dexia hopes to grow in this and related Welds. Dexia intends to use BIL as the vehicle for its continued international expansion and it will soon combine with Dutch merchant bank Labouchere. BIL claims to be the leading service provider in developing the investment fund industry in Luxembourg, providing all manner of funds administration, custody, book-keeping, consultancy and shareholder services. It is also a leading private bank in Luxembourg with strengths in asset management including Sicavs, investment products and inheritance planning. BIL won key customer service awards in Luxembourg last year and attracted substantial inflows of customer deposits that helped it report a 65% increase in net profit. BIL was the First bank in Luxembourg to offer online banking via the internet in 1997 and this April continued its record of innovation with BILonline, which allows customers to trade stocks on European exchanges starting with Paris and Brussels as well as Nasdaq and New York. London and Frankfurt should be added soon. Citibank also competes at the high end of the consumer markets, seeking customers with up to e500,000 in assets to invest, but what mainly distinguishes it from the other banks in Luxembourg is its determination to do traditional corporate banking for the small handful of sizable Luxembourg corporations, such as CargoLux - for which is has arranged aircraft Financing - and the high level of expertise it brings to funds administration. It aims to be the bank for other Financial institutions. There are now in excess of e800 billion of assets under management in funds in Luxembourg, making it the second largest centre for funds administration in the world after the US. It has overtaken France and Germany. And while the Luxembourg authorities do all they can to attract these funds, Citibank devotes itself to deposit-taking banking functions for these funds - collecting money on their behalf and allocating it among accounts - as well as other exhaustive funds administration, including calculating monthly, weekly and daily net asset values, facilitating corporate actions and verifying that fund managers are abiding by their prospectus promises. Though a large portion of the potential market is captive in very large funds such as Fidelity and State Street, the overall market is growing and an increasing amount of administration is being outsourced. Citibank is busy marketing its services to decision makers inside Luxembourg throughout Europe and in the US and hopes to build quickly on what, according to its own estimate, is a 4% to 5% share of the available market. It has 170 people working in Luxembourg in deposit taking and administration linked to servicing these funds.

NETHERLANDSBest bank: ABN Amro Best foreign bank: Citibank Best domestic equities firm: ABN Amro Best foreign equities firm: Morgan Stanley Best domestic bond house: ABN Amro Best foreign bond house: UBS Warburg Best domestic M&A adviser: ABN Amro ABN Amro and ING are the clear leaders in banking in the Netherlands, with ABN Amro standing ahead of its rival with a dominant position in corporate banking in the Netherlands as well as a strong retail franchise. It has a share of loans and deposits in the Dutch banking system of around 24% and has for some time been preoccupied with expanding outside its small home market across Europe, as well as with building up investment banking. Rumours occasionally surface of a further possible domestic merger with ING or Fortis. A rival banker in Amsterdam sums up the competitive position: "ABN Amro is the best of the Dutch banks, though they have lost a little focus this year as the bank has wrestled with strategic questions of how it builds up in investment banking. Still, everything they do, they do quite well. And they must because Dutch clients are becoming slightly less oriented to Dutch banks, particularly in investment banking. It used to be that Dutch clients' First call was automatically to ABN Amro. Now that's not always the case." He concedes: "Still if you're a large Dutch company making an acquisition outside the Netherlands and you're going to retain one of ABN Amro, ING, Rabobank or Fortis, there's every chance it will be ABN Amro." Its traditional strengths are in core banking areas such as cash management and lending, where the bank continues to enjoy a large share of business with Dutch corporations. It is increasingly using its lending relationships as a a starting point for higher-value investment banking services and has made a strong improvement in recent years in mergers and acquisitions advisory, where it has been on something of a hiring spree, and capital markets as well as in private equity. The bank has devoted some e2.5 billion of its own capital to private equity investments, seeking a high investment return and strategic insights into key industries around which its is building sector corporate Finance teams. Although the Netherlands market is small, it is home to some large multinational companies and provides a decent home base from which ABN Amro intends to pursue its aim to be among the top three European investment banks in the next two to three years. The bank has taken a clear lead in Fixed-income markets, far outstripping its nearest rival, ING, in Euromoney's May ranking of leading traders in Netherlands government bonds. According to statistics from Capital Data Bondware, it has a near 25% share of new public bond issues in all markets for Dutch borrowers in the past 12 months. It has led large deals for Ahold, Aegon, BNG, De Nationale Investeringsbank, as well as large mortgage-backed deals and consumer loan securitizations and offerings for Dutch banks. Among the foreign Firms, UBS Warburg has by far the largest share of new bond issues for Dutch borrowers, leading many deals for Dutch banks such as Rabobank, corporates such as Aegon and Shell Finance, public sector borrowers and securitization deals. Similarly in equity markets, European fund managers rank ABN Amro highly for the quality of its execution in Dutch stocks and for its research. Its equity capital markets joint venture with Rothschild continues to be a success. ABN Amro Rothschild has been appointed global co-ordinator and bookrunner on most large issues by Dutch corporations over the past year, most notably for Koninklijke Ahold, VNU, - for both of which it has also led large convertible bonds - and Royal Dutch Petroleum. It remains to be seen whether this franchise will suffer any long-term damage for its lead role alongside Goldman Sachs in the controversial IPO of World Online. Among the foreign Firms, Morgan Stanley has led some of the more prestigious equity offerings from Dutch companies in recent month, including large stock offerings from Equant, KPNQwest and VersaTel Telecom. Among the foreign banks in the Netherlands, Citibank has improved on its already strong position from the addition of Salomon Smith Barney. Its loan underwriting power has been in evidence in transformational deals, such as the e13 billion acquisition Finance facility for KPN this January where it was joint arranger. It also led a e800 million acquisition facility for Heineken in Spain. The bank now adds bond and equity underwriting and M&A advisory to the services it provides for Dutch corporates already turning to it for loans, forex, treasury and cash management. It has played lead roles in key straight bond and convertible issues for VNU for acquisition funding. A large part of Citibank's business in the Netherlands is with the large institutional investors that make the country home to the fourth-largest pool of assets under management in the world. It provides custody for 35% of cross-border assets held in the Netherlands and the bank is seeking ways in partnership with Salomon Smith Barney to provide integrated brokerage and custody services. It also does a large amount of forex business and forex hedging for these large investors including the huge Dutch pension funds.

PORTUGALBest bank: Banco Comercial Português Best foreign bank: BSCH Best domestic equities firm: BCPA Best foreign equities firm: Merrill Lynch Best domestic bond house: BES Best foreign bond house: Deutsche Bank Best domestic M&A adviser: Banco Finantia Best foreign M&A adviser: Schroder Salomon Smith Barney Banco Comercial Português (BCP) has consolidated its position as Portugal's leading bank, with large acquisitions this year. It has taken over the family-owned Banco Mello as well as Banco Pinto&Sotto Mayor, which was previously part of the Champalimaud Financial group. Meanwhile, BCP's biggest rival in Portugal, Banco Espírito Santo (BES), failed in its own attempt to secure the acquisition of another large Portuguese bank, Banco Português de Investimento (BPI). These deals mark the end of a convulsion in Portuguese banking that began last year when António Champalimaud, Portugal's richest man, sought to sell two banks under his control, Banco Pinto&Sotto Mayor as well as Banco Totta, to the Spanish banking giant BSCH only to be confounded by nationalistic interests. BSCH eventually acquired Banco Totta, so elevating it to one of the largest banks in Portugal and the clear leader among foreign banks in the country. Adding Totta to the existing operations of Banco Santander de Negociós Portugal boosted the Spanish bank's share of the Portuguese market from 2% to 11%, putting it within striking distance of BES, which has a 14% market share. Meanwhile Banco Pinto eventually passed to BCP. BCP's nearest rival in Portugal now is the state-owned savings bank Caixa Geral de Depósitos, commonly known simply as Caixa. BCP was formed just 15 years ago, concentrating First on retail and small-business banking and quickly moving on to private banking and corporate banking for the country's largest companies. It now has just under 30% of the Portuguese banking market, roughly equal to Caixa, and boasts a market capitalization of e10 billion, far higher than its nearest publicly traded Portuguese banking rivals. Its management has a strong record of managing growth through acquisition, as shown from its purchase in 1995 of Banco Português do Atlantico which even then created the country's largest bank. "BCP has the best management in Portugal, comparable with the best in Europe," says one European banking analyst. Even before the latest round of mergers, BCP ranked as sixth-largest bank in the Iberian peninsula and it is probably the only Portuguese banks with a credible opportunity to carve out a European strategy of its own. Like many large banks in smaller European countries it has sought strategic stakes in central and eastern Europe. For the moment it has enough on its plate consolidating its new acquisitions and managing the huge growth in the Portuguese market where loan growth, and especially mortgage loan growth, has been spectacular. The bank recorded 30% loan growth last year while managing to keep overdue loans to just 1.1% of total lending. As well as conducting traditional wholesale and retail banking, BCP has moved aggressively into insurance, asset management, leasing and factoring. Though its structure looks a little federal, with several brands co-existing, BCP management understands how strengths in retail and wholesale Financial services reinforce each other in Portugal. This is evident in the way it has used its private banking arm as a distribution strength in the securities markets where it has improved its coverage of Portuguese equities through Cisf dealer, its stockbroker now rebranded as BCPA. It now produces international standard research in cooperation with Robert Fleming. It is becoming a force in distribution of Portuguese stocks outside the country and in selling foreign stocks to Portuguese investors. It was chosen as the lead Portuguese bank in the First pan-European retail stock Offering for Deutsche Telekom last year. BCPA also played lead role as global co-ordinator of the Offering for Spiracle and the latest privatization Offering of shares in Brisa. BCPA has opened up trading and custody facilities for its customers wishing to deal in shares around Europe. Among the foreign Firms Merrill Lynch maintains its strong track record as global co-ordinator on large new issues for Portugal Telecom. BES is also a strong force in Portuguese Fixed-income markets, being highly ranked in Euromoney's May poll of Portuguese government bond dealers, and it is also a leader in the smaller local corporate bond market. BES is preparing for what should be a growing securitized bond market as banks seek to shed some of the assets that have swollen their balance sheets. Among the foreign banks, Deutsche Bank stands out as leading trader and distributor of Portuguese government debt, playing a lead role in recent large dollar and euro-denominated deals for the Republic of Portugal. It has a huge share of the new and growing market in securitized bonds. Banco Finantia, a small independent investment bank, is a leader in mergers and acquisitions in Portugal and in the past 12 months has been active in many smaller domestic Portuguese transactions as well as cross-border deals such as the acquisitions by France's Auchan of a leading Portuguese hypermarket chain, Spain's Dragados' purchase of two Portuguese construction companies and the acquisition by Portugal's Autosil of Steco Batteries in France. Schroder Salomon Smith Barney leads the ranks of foreign investment banks advising on deals with a Portuguese leg.

SPAINBest bank: BSCH Best foreign bank: Citibank Best domestic equities firm: BBVA Best foreign equities firm: Merrill Lynch Best domestic bond house: BBVA Best foreign bond house: Schroder Salomon Smith Barney Best foreign M&A adviser: Morgan Stanley Dean Witter BSCH is the product of a well-worked out merger, announced last January, between two seemingly incompatible Spanish banks. Banco Santander had already been driven by its autocratic chairman, Emilio Botín, towards the top of Spanish banking and had a reputation for being entrepreneurial, opportunistic, quick-moving and always on the look-out for the next deal. BCH was a much more staid, conservative and ordered bank, with highly professional management. The two cultures have melded surprisingly well, perhaps out of a recognition of mutual need. The bank is the largest in Spain measured by assets, market capitalization and market share with a roughly 20% share of loans and 19% share of deposits putting it slightly ahead of its great, and arguably equally well-managed, domestic rival, BBVA. BSCH has made great strides following its merger, having quickly integrated the two banks' IT systems, treasury and corporate banking functions. To Spanish corporations the bank now offers a mixture of old-style relationship banking and more Anglo-Saxon transaction-oriented banking. It has trimmed its international investment banking ambitions but remains powerful at home. BSCH now stands poised to play a central role in the reshaping of European banking and has already shown its powerful ability to help banks in which it has major strategic shareholdings, having shored up the defences of Société Générale and helped Royal Bank of Scotland succeed in bidding for NatWest. It has holdings in Sanpaolo IMI and Commerzbank. Among the foreign banks, Citibank has improved following the addition of Schroder Salomon Smith Barney. This adds to its existing strength in traditional transaction services, where Citibank is the number one foreign euro clearing bank in Spain by volume. Last year, Citibank advised and co-arranged the $16 billion loan for Repsol's acquisition of Argentina's YPF - then the largest ever underwritten loan in Europe. Schroder Salomon Smith Barney then took a co-arranger role in the large bond issue which replaced the loan. Citibank was also arranger of a e1.2 billion general corporate loan for Telefónica and arranged Financing for Heineken España's acquisition of Cruzcampo. Salomon Smith Barney leads the rankings for arrangers of bond deals for Spanish issuers, also running the books on deals for BSCH and Caymadrid. Among the domestic bond market Firms, BBVA heads Euromoney's May ranking of leading traders of Spanish government bonds and is the leading arranger of bond deals for Spanish borrowers over the last 12 months with transactions for Endesa, Iberdrola, Telefónica and RTVE to its credit. BBVA is also the leading Spanish arranger of equity offerings for Spanish names, taking global co-ordinator positions in large transactions for Terra Network, Red Electrica de España and Repsol. Merrill Lynch ranks highest among foreign Firms for its research coverage of Spanish stock and has also played a lead role in many recent primary market transactions from Spain, including those for Repsol, BBVA, and Obrascon Huarte Lain. Morgan Stanley's strong corporate Finance franchise in Europe puts it atop the rankings of advisers on deals involving Spanish acquirers and targets.

Best domestic bank: Deutsche Bank Best foreign bank: Citibank Best bond firm: Deutsche Bank Best foreign bond firm: UBS Warburg Best equities firm: Deutsche Bank Best foreign equities firm: Merrill Lynch Best M&A adviser: Lazard Best foreign M&A adviser: Goldman Sachs The future of banking in Europe remains difficult to discern as the continent's leading banks continue to struggle with local competitors in domestic consolidation while stopping short of cross-border takeovers. The forces of nationalist sentiment remain strong in Europe, as evidenced by the hostile reaction in Portugal to BSCH's attempt to acquire from the Champalimaud group a large slice of the Portuguese banking system. Belgium is a rare example of a European country that has allowed its largest domestic banks to be taken over by banking giants from neighbouring countries. Even the large Dutch banks now seem rather stuck. ABN Amro made much of its taking a 9.8% stake in Banca di Roma last year, but this has scarcely been the starting point for pan-European expansion. French banking is still in the aftershock of the three-way battle between BNP, Société Générale and Paribas, which First saw SocGen and Paribas seek to merge, then BNP bid for both and Finally end up with Paribas, when its real target was SocGen. A worrying trend for bank shareholders hoping to profit from takeovers is several large continental banks seeking now to cap the voting rights of any outside shareholder. In Germany, too, domestic consolidation remains the primary concern. Dresdner Bank is now in talks with Commerzbank, following the failure of its merger with Deutsche Bank. Meanwhile HypoVereinsbank forswears any European ambitions and says it want to remain a regional power. Italian banking has further consolidated in the past 12 months with three large groups emerging around UniCredito Italiano, Banca Intesa, which now owns BCI, and Sanpaolo IMI. But even these three barely amount to national banks, let alone European-scale operators, and their international ambitions have led them into central and eastern Europe, the destination for many small European banks seeking growth outside restricted and low-growth home markets. Spain may yet prove the breeding ground of domestic champions. Its two great banks, BSCH and BBVA, have leapt ahead in the past 10 years, starting out behind their European peers in an economy with some emerging-market characteristics. The managements of these banks now stand out as among the most rigorous, professional and far-sighted in Europe. BSCH in particular stands at the centre of an intriguing skein of connections running through Société Générale, Commerzbank, Royal Bank of Scotland and Sanpaolo IMI. In the past, translating such loose alliances and strategic cross-shareholdings into Significant ventures has proved beyond the leaders of Europe's banks. Now there is another uncertainty: the internet. Banks across Europe think about the internet in terms of defensive strategies and offensive strategies. Banks with large market shares through traditional branch networks worry about the internet's potential to admit new competitors on a different business model, while wondering how to use the internet to their advantage where, so far, they have made no mark. A bank such as ABN Amro, with a large share of a small home market and seeking ways to grow beyond this home, might potentially be a big beneficiary if it constructs the right internet strategy. Certainly the internet makes banks think differently about expensive acquisitions. Deutsche Bank chairman Rolf Breuer explains why the bank, which once was eager for cross-border acquisitions in Europe, is now not so keen. "Everyone realizes that big cross-border mergers are risky and might not be the right thing to do. Instead of buying into an existing expensive brick and mortar infrastructure, we would rather use internet tools to expand in Europe in retail banking, private banking and banking for smaller corporations." It is not too hard to pick out Deutsche Bank as the leading bank in the eurozone. It is one of the few large European banks to have made any substantial progress across the continent in retail and wholesale banking and increasingly now in investment banking. Beyond Germany, the eurozone's single largest domestic economy, where it remains firmly the leading universal bank in spite of the failure of its attempted merger with Dresdner, it occupies strong positions in the next three largest eurozone economies - France, Italy and Spain. In France it is Euromoney's best foreign bank mainly on the strength of its corporate banking business. It is a leading arranger of syndicated bank loans and bond market Finance for French corporations. It is also a leading provider of cash management. Increasingly it is establishing itself as an M&A adviser, once a glaring weakness for the bank. For example it was sole adviser to France Télécom on its acquisition of a 28.5% strategic stake in Mobilcom for e3.7 billion. Deutsche also arranges export and project Finance for French clients throughout the world's emerging markets. It is also improving its asset management performance and funds under management from French clients. In Spain and Italy it has strong retail presences. In Italy it has attracted 500,000 clients through 260 branches and in addition has 600,00 consumer Finance customers and 1.6 million credit card clients. It owns leading retail investment fund company Finanza&Futuro and plays a leading role in wholesale funding and capital markets for Italian companies. In Spain, Deutsche has the largest retail network of any foreign bank since the German bank has signed an agreement with the Spanish post office giving it effectively 2,200 retail outlets. Again it is strong in wholesale Finance both on the bond markets, where it ran the books on the Kingdom of Spain's 31 year e1 billion Eurobond, and in lending, where it arranged e468 million of bank Finance for the buy-out of Torraspapel, Spain's biggest LBO to date. Add to this its strong presences in many of the smaller eurozone economies, including Austria, Belgium and the Netherlands. Last year it acquired the Belgian network of Crédit Lyonnais and now employs more than 1,000 people in Belgium. It is one of the largest foreign banks in the Netherlands, operating out of Amsterdam and Rotterdam. It arranged large loans over the past 12 months for Lucent Technologies, Aegon and Getronics. An example of its broad service: it arranged a $2.25 billion revolving credit, term and bridge loans, $350 million of bond Financing and a e300 million equity Offering for Buhrmann in connection with its purchase of American office supply company Corporate Express. Deutsche is also becoming a powerhouse in equities in its home market, with improving research and sales coverage, and market-leading equity derivatives and equity capital markets franchises. It was joint global co-ordinator of the largest IPO in Belgium last year for Agfa-Gevaert; it was sole-lead manager of the IPO of French internet company LibertySurf; it led key deals in Germany including Infineon Technologies, Deutsche Telekom II and III; it was a joint global co-ordinator on the latest Offering from Brisa in Portugal. It leads the arranger rankings for equity deals in the past 12 months, including convertible and exchangeable bonds, from eurozone issuers. But its research does not yet rank as high as the top Firm according to Euromoney's poll of European equity fund managers. This is Merrill Lynch, which also scores highly for execution and is a top global co-ordinator in the primary market. Across Europe, Deutsche is the leading Firm in the bond markets, both in secondary trading of Eurobonds and European government bonds and in arranging new issues for eurozone borrowers. UBS Warburg is the leading bond Firm from outside the eurozone. Taking a low-profile in vanilla Pfandbriefe and FRN markets, it has an impressive spread of business by currency, maturity and issuer type and has led a number of highlight deals, such as the largest ever e5 billion Eurobond for Belgium, Generali's debut e1.5 billion international bond and a range of investment-grade corporate deals. Its retail placement in Switzerland remains a powerful distinguishing strength and it has put itself at the forefront of internet and electronic bond trading initiatives in Europe. Citibank has long pursued a strategy of providing transaction services, cash management, custody, foreign exchange and lending to the largest corporations and institutional investors in each country in Europe. It operates in all the nine non-eurzone European countries as well as the 11 inside the eurozone. It is well regarded for these services and has now added the powerful combination of Salomon Smith Barney, a bulge bracket global investment bank with particular strength in bond markets as well as equities and M&A. These leave Citibank a more powerful pan-European bank than most large European banks headquartered inside the eurozone. In retail banking, Citibank has 500 branches across the region, with particularly strong presences in Germany, Spain and Belgium.

In mergers and acquisitions, Europe is a battleground largely fought over by foreign armies of which by far the two most powerful are Goldman Sachs and Morgan Stanley. Goldman leads the ranking by value of deals and also won the day in the most high profile battle between the two sides when it led Vodafone's assault on Mannesmann which Morgan Stanley defended. Private partnership Lazard remains the local leader and Rothschild is still a force in European M&A, though here too Deutsche is coming up fast.