The past 12 months have been the worst in living memory for the finance industry, but such times of adversity are when banks and bankers earn their reputations. The Banker salutes the institutions that have managed the challenges the crisis presents with skill, courage and expertise.

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 THE GLOBAL AWARDS WINNERS:

 GLOBAL BANK OF THE YEARBNP Paribas

 WESTERN EUROPEBNP Paribas

 CENTRAL & EASTERN EUROPERaiffeisen International

 ASIAICBC

 LATIN AMERICABanco Santander

 MIDDLE EASTNational Bank of Kuwait

 AFRICAStandard Bank

 EMERGING MARKETSStandard Chartered Bank

 CASH MANAGEMENTCiti

 SECURITIES SERVICESBank of New York Mellon

 ENVIRONMENTAL, SOCIAL AND GOVERNANCEBradesco

 LIFETIME ACHIEVEMENT AWARDIbrahim Dabdoub

 GLOBAL & WESTERN EUROPE AWARD

BNP Paribas

 In a year of tumult in the financial sector, with businesses and returns under the microscope, BNP Paribas’ universal model has demonstrated a remarkable level of stability and resilience. For the first nine months of 2008, the group’s revenues totalled 22.53bn; this may be 6.6% below the same period last year, but it is a triumph in the current climate.

 In Q3, the bank generated revenues that were only 1% lower than the same period a year earlier, and up by 1.3% on the second quarter this year. And unlike some firms, BNP Paribas did not achieve this by using the recent amendment to the IAS 39 accounting standard authorising the transfer of illiquid assets out of the trading book.

 BNP Paribas has clearly benefited from resisting the lure of business lines that have bequeathed serious problems to its competitors, but it has also excelled in key growth areas; for example, this year the bank also won The Banker’s Award for Innovation in Islamic Finance.

 Equally, it has not been slow to spot and grab the right opportunities. Earlier this year, for example, it acquired Bank of America’s prime brokerage business, gaining critical mass in a business that is difficult to build out organically. Similarly, the acquisition of a 75% stake in Fortis’ operations in Belgium and Luxembourg – avoiding most of the bank’s troubled credit derivatives portfolio – gives BNP Paribas the largest retail deposit base (at €586bn) in the eurozone.

 “BNP Paribas’ robust business model has a track record of delivering strong and diversified earning streams from all its business lines. This is thanks to its excellent client franchises and the quality of its teams,” says CEO Baudouin Prot. “While obviously not immune to the financial crisis, BNP Paribas’ stringent risk policy culture and good cost control during these difficult times have positioned it well to continue growing organically over the cycle. The recent acquisition of Fortis will present BNP Paribas with a unique opportunity to expand its pan-European footprint and become the largest bank in the eurozone in terms of deposits.”

 

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Walter Rothensteiner, chairman,RZB management board

CENTRAL & EASTERN EUROPE

 Raiffeisen International

 Raiffeisen subsidiaries won individual Bank of the Year awards in three different countries this year, more than any other operator in the central and eastern Europe (CEE) region. As liquidity and macroeconomic conditions in the region deteriorate, the bank has not been immune, and it sought a capital injection of up to €2bn from the Austrian government’s emergency fund in November 2008. But this is a smaller sum than some of its peers, with a rights issue of €165m taking place at the same time to shore up the capital base.

 And the bank looks set to benefit from its first-mover status across much of the region – being more established, it has not needed to expand loan portfolios so aggressively among marginal customers at the height of the boom, making it less vulnerable to the bust than some more recent entrants. Credit quality across the region will undoubtedly suffer, but in many of the most volatile economies, Raiffeisen subsidiaries start from a relatively healthy position. Raiffeisen Bank Aval in Ukraine centralised its debt collection service in August 2007, bringing down bad loans by 25% over the course of that year, while Raiffeisen Bank Romania cut its non-performing loan ratio to 1.48% in 2007, from 2.85%.

 “This very prestigious award underlines our unique strategic position in this promising region and our sustained business model,” says Walter Rothensteiner, chairman of the RZB management board and Raiffeisen International supervisory board. “This is based on our broad inter-regional diversification and our continuous commitment to customer-focused banking operations. Given the prevailing turmoil in international financial and capital markets, the biggest challenge for our group and all market participants in 2009 will be to keep public confidence in the functioning of the region’s banking system.”

 ASIA

 ICBC

 Besides record profits in 2007 of $11.3bn and record performance returns, ICBC also agreed to buy 20% of Standard Bank of South Africa, opened subsidiaries in Moscow and Indonesia, and has applied to set up branches in Dubai, Doha and Sydney. It also made significant moves to extend its international reach.

 ICBC has managed to achieve a record 16.2% return on equity in 2007 and has continued to expand its regional and international role not only in Africa but elsewhere in the Gulf and Asia. The bank has the largest domestic network and one of the fastest-growing international presences, with 71 branches and subsidiaries in major international financial centres around the world.

 “ICBC is greatly honoured to be awarded Bank of the Year in Asia by The Banker,” says ICBC chief executive Yang Kaisheng. “This award means recognition of our outstanding performance. During the past year, ICBC stuck to its policy of prudent operation, and its continuous rapid growth proves sound development potential. In the future, ICBC will pay close attention to changes in the global economic and financial arena, press ahead with innovation and the transformation of its operating model, constantly consolidate its market strength and risk management capacity, and further improve its ability for sustainable development.

 

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Francisco Luzón, senior executive vicepresident for the Americas division of Santander

LATIN AMERICA

 Banco Santander

 Santander, the Bank of the Year in both Argentina and Uruguay, is playing an increasingly important role in Latin American finance, as Latin America is in Santander’s business. In the first nine months of this year, the region accounted for 29% (€2.17bn) of the group’s net profits, with Brazil representing 10% of that. In the third quarter, the region earned Santander a record €1.2bn.

 If return on equity was lower, declining by 216 basis points, then 27.5% is still quite startling; and, with the efficiency ratio improving yet again – coming down from 41.3% in the same period in 2007 to 38.2% this year – many other banks must be looking on with envy.

 Santander has largely dodged the fallout from the subprime debacle in the US, and has managed to maintain robust profitability despite making significant acquisitions, including ABN AMRO’s Latin American business last year. Its acquisition of ABN’s Uruguay assets, for example, has helped to create a powerful franchise there – commanding almost 85% of the private banking sector’s profits.

 Some argue that its €7.2bn rights issue, which stunned markets in November, is a sign that Santander is battening down the hatches, expecting trouble in some of its core markets such as Latin America, as investors pull their money out of emerging markets. Whether or not this is the case, Banco Santander still looks well placed to make the most of this continent’s future.

 “Latin America was one of Santander’s key engines of growth last year and in the first nine months of 2008, when net profit in dollars increased by 20%,” says Francisco Luzón, senior executive vice-president for the Americas division at Santander. “We expect growth in profit to continue as the region’s economies continue to grow more than developed countries. By 2010, we believe there will be 60 million Latin American households with more than $12,000 annual income, fostering greater ‘bankarisation’ – banking intermediation of households and small and medium-sized enterprises. In Brazil alone, bankarisation can double in 10 years. Our investment in Latin America is founded on the region’s excellent economic and social outlook.”

 MIDDLE EAST

 National Bank of Kuwait

 National Bank of Kuwait, the country’s largest bank by assets, has this year completed the acquisition of Al Watany Bank of Egypt, a 40% stake of Turkish Bank and opened a branch in Dubai. Besides having net profits rise above $1bn in 2007 and reach $915m for the first three quarters of 2008, NBK now has an international network that covers 16 countries and four continents and generates 18% of operating income.

 “NBK is honoured with this prestigious award from The Banker, a leader in recognising outstanding performance in the banking community,” says group CEO Ibrahim Dabdoub. “We have always strived to maintain the highest levels of excellence and to match the highest international standards. We are very excited about the future as we see tremendous potential for growth. NBK works constantly on developing our services and extending our reach, while we advance in our regional expansion plans. We have a solid foundation and the trust of our customers and we hope to extend the same valuable services to new markets.

 “Our vision at NBK is to be the premier bank in the Middle East. Our regional expansion strategy, how we do business, how we compete, how we serve our customers reflect our commitment to this vision. If I were to single out the most important determinant of our success, I would say it is execution capabilities. Everyone at NBK puts in a lot of effort to deliver value to all of our constituents and capture synergies across the Group. The Banker award comes as an important validation for us and our customers that we are doing the right thing.

 

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Jacko Maree, chief executive, Standard Bank

AFRICA

 Standard Bank

 Standard Bank won a raft of awards across Africa in 2007’s Bank of the Year awards. Its subsidiaries now operate successful banks the length and breadth of the African continent and as such it is a worthy winner of this year’s regional award.

 Outside of its hugely successful $5.24bn deal with China’s biggest bank, ICBC, which boosted its capital base at a vital time in the economic cycle, Standard Bank wins praise for its forward thinking expansion policy. Outside of its home market, Standard Bank subsidiaries won awards this year in Botswana, Democratic Republic of Congo, Lesotho, Malawi, Namibia, Swaziland, Tanzania and Zimbabwe.

 The bank has succeeded in introducing countless Africans to banking services, hitherto unobtainable to them. It prides itself as a pioneer, opening up new markets in countries that other banks would not even consider. It has also managed consistently to post strong profits on the back of its retail, corporate and wholesale operations.

 The bank has spread its tentacles far and wide, not just across Africa, but in the emerging markets too. This was demonstrated in 2007 through its acquisitions in Nigeria, Turkey and Argentina. “Without our staff’s commitment and hard work, and our customers’ loyalty; our operations in Africa would not be the success they are,” says Jacko Maree, Standard Bank’s chief executive. “We should always remember however that these awards are a measure of our performance looking back, and we need to focus on being even better in the years to come.”

 EMERGING MARKETS

 Standard Chartered Bank

 With its strategic focus on Asia, Africa and the Middle East, Standard Chartered is a natural contender for the Emerging Markets award. Headquartered in the UK, the bank escaped the traumas that afflicted several other British banks with exposure to US subprime assets and domestic property and forged ahead instead with its international operations.

 The year 2007 was the best year in its recent history, with a 23% increase in underlying income on the back of strong growth in Hong Kong, India and China. With other banks in disarray, Standard Chartered has been exploiting its strong position and mopping up assets and staff – it picked up a specialised team and some assets from Lehman Brothers Brazil as well as the Asian business of JPMorgan Cazenove last month.

 Earlier the bank acquired Asia Trust, a small bank in Taiwan, and introduced internet banking to Vietnam, a market it plans to grow considerably in over the next few years.

 In the critical China market, where the bank incorporated last year, it now has 49 branches. Last year, operating income in India exceeded $1bn for the first time and mindful of the new wealth in emerging markets, it launched its private bank in 11 locations across seven markets.

 Emerging markets cannot expect to escape the downturn but Standard Chartered’s strong franchise and long-term commitment will allow it to weather most of the storms. Chairman Mervyn Davies said of the results: “Standard Chartered has shown how its position in the world’s growth markets and the strength of its balance sheet can deliver record results during turbulent times. We are not complacent about the future but are confident we will deliver another strong performance in 2008.”

 CASH MANAGEMENT

 Citi

 Citi once again proved it was a leader of the pack in 2007. The bank operates at the cutting edge of the international transaction services industry and takes full advantage of its immense scale. Revenues in Citi’s treasury and trade division had reached a whopping $4.7bn by September this year, a 25% increase on the same period in 2007, and the bank estimates those revenues to have increased to $6bn by year end. These results mark 20 consecutive quarters where the bank has delivered double-digit growth in its treasury division.

 Citi has continually displayed its ability to innovate. Already in 2008 the bank has committed €35m towards researching and developing the next generation of electronic banking portals. In 2007, the bank launched its ‘Procure-to-Pay’ software that will allow end-to-end automation of the financial supply chain. It also boosted its remittances business through the purchase of PayQuik, a leading remittance software firm, in February this year.

 Looking ahead, Citi has placed a heavy emphasis on winning business in the public sector. To this end, the bank won a cash management contract with the UK’s government banking service and was recently chosen to run the US Department of Defence’s travel card programme. Citi has done well to build its transaction services division during a turbulent time for financial markets. Its com­mitment to innovation means it stays ahead of its competitors and fully deserves to be awarded Cash Management House of the Year for 2008.

 “We win when our clients win, and our commitment, first and foremost, is to provide them with best-in-class services and solutions,” says Francesco Vanni d’Archirafi, Citi’s global head of treasury and trade.

 SECURITIES SERVICES

 Bank of New York Mellon

 When Bank of New York Mellon was appointed to provide global custody for Eureko, whose group assets are valued at €38bn, it was a milestone for the bank in terms of the size and scope of the mandate. Moreover, winning the business of such a large Dutch business bears witness to the growing strength of BNY Mellon’s European asset servicing business.

 The bank was created through the merger of US houses Bank of New York and Mellon Financial Services in July last year. Even while completing the integration, BNY Mellon continued to drive service improvements, and to introduce new services and technology.

 It was chosen to administer the world’s first actively managed exchange-traded fund, and in July this year it introduced a series of new reports designed to assist clients meeting FAS accounting standards, making BNY Mellon the first company to automate FAS 157 reporting.

 “We have travelled a long way in the past decade; then we were a ‘transaction machine’ primarily focused on processing. Today we are in the business of data transformation and enrichment, and play a critical role as a generator of market intelligence. As our recent appointment as custodian to the US Troubled Assets Relief Programme (TARP) demonstrates, we are now unquestionably established as one of the pillars of the global financial services industry,” says James Palermo, co-CEO of BNY Mellon Asset Servicing.

 ENVIRONMENTAL, SOCIAL AND GOVERNANCE

 Bradesco

 ESG is not a new concept for leading Brazilian bank Bradesco but its various programmes have gathered so much pace that it is an outstanding winner of this year’s award.

 For 19 years it has worked on rainforest issues, while the Bradesco Foundation was set up 51 years ago and runs 40 schools throughout Brazil. Funds have been channelled to families in the Amazon in return for preventing deforestation, recycled paper is used for documents and cheque books and last year the Banco do Planeta (Bank of the Planet) brand name was created to reflect the bank’s environmental commitment.

 “The Banker’s recognition of our work in the area of corporate social and environmental responsibility is of historic importance for us at Bradesco and will be one of the highlights when we list the main events of 2008,” says Márcio Cypriano, chief executive of Bradesco.

 “Every one of Bradesco’s employees, who number more than 85,000, is proud to participate directly in the investment we carry out to protect Brazil’s forests and improve the social inclusion indices of the poorer part of the population through education and sport. The resources invested, which amount to more than R$300m annually, originate from part of the revenues from the sale of products such as credit cards, premium bonds and loans.”

 

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Ibrahim Dabdoub, CEO, National Bank of Kuwait

LIFETIME ACHIVEMENT AWARD

 Ibrahim Dabdoub, National Bank of Kuwait

 Ibrahim Dabdoub has been the leading light at National Bank of Kuwait, the country’s largest bank, as CEO since 1983, and in his time has witnessed the full panoply of events from the Souk Al-Manakh financial crisis in Kuwait in the 1980s, to the Iraqi invasion in the 1990s, and the current global credit crunch. More than any other Arab banker, Mr Dabdoub has been at the centre of financial developments in Kuwait and the Gulf for the past five decades and he has steadily steered his institution to become one of the most profitable and successful banks in the region.

 Mr Dabdoub, following education at College des Freres in Bethlehem, the Middle East Technical University in Ankara and at Stanford University in California, joined NBK in 1961 and saw his career progress from head of credit in 1969 to deputy chief executive in 1981, before assuming the CEO position. The 1982 post-dated cheque crisis created a huge unregulated expansion of credit, in which only NBK survived intact, and led to recession in the region.

 With the Iraqi invasion in 1990, the financial landscape was again transformed but once again, after the invasion was thwarted, NBK was re-established and has again become the pre-eminent institution in the region. Since then, NBK has expanded regionally and internationally, with recent acquisitions in Egypt and Turkey bringing together total assets of $42.3bn, the third largest in the Arab world, at end 2007.

 Mr Dabdoub’s strong leadership through this period has helped NBK play a leading financial role in the Arab world and as a board member of the Washington-based Institute of International Finance, among other roles, he has had an important global role and very much deserves his ‘Lifetime Achievement Award in Banking’ for his near five decades in banking.

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