There has been no let up in the pace of change in the investment banking industry in 2015, and The Banker celebrates the participants that moved their feet fast enough to keep up. 

There seems little doubt that the horizons of the investment banking world are shrinking. Global growth generally remained strong in 2015, but the cumulative power of more and more regulation, and higher and higher cost pressures, appears to be squeezing the market into a new shape. 

Winners 

  • Most innovative investment bank
    Winner: HSBC
  • Most innovative investment bank from western Europe
    Winner: HSBC
  • Most innovative independent investment bank
    Winner: Moelis & Company
  • Most innovative team
    Winner: Morgan Stanley
  • Most innovative investment bank from central and eastern Europe
    Winner: UniCredit
  • Most innovative investment bank from North America
    Winner: Bank of America Merrill Lynch
  • Most innovative investment bank from Latin America
    Winner: Itaú BBA
  • Most innovative investment bank from Asia-Pacific
    Winner: DBS
  • Most innovative investment bank from the Middle East
    Winner: QInvest
  • Most innovative investment bank from Africa
    Winner: Standard Bank
  • Most innovative investment bank for bonds
    Winner: HSBC
  • Most innovative investment bank for climate change
    Winner: Bank of America Merrill Lynch
  • Most innovative investment bank for equity derivatives
    Winner: Société Générale
  • Most innovative investment bank for equity-linked bonds
    Winner: Barclays
  • Most innovative investment bank for foreign exchange
    Winner: Credit Suisse
  • Most innovative investment bank for project and infrastructure finance
    Winner: HSBC
  • Most innovative investment bank for IPOs and equity raising
    Winner: Deutsche Bank
  • Most innovative investment bank for Islamic finance
    Winner: CIMB Islamic
  • Most innovative investment bank for leveraged finance
    Winner: Goldman Sachs
  • Most innovative investment bank for mergers and acquisitions
    Winner: Citi
  • Most innovative investment bank for private placement
    Winner: Bank of America Merrill Lynch
  • Most innovative investment bank for restructuring
    Winner: Rothschild
  • Most innovative investment bank for risk management
    Winner: HSBC
  • Most innovative investment bank for securitisation
    Winner: Deutsche Bank
  • Most innovative investment bank for structured investment
    Winner: BNP Paribas
  • Most innovative investment bank for consumer and retail goods
    Winner: Bank of America Merrill Lynch
  • Most innovative investment bank for emerging markets
    Winner: HSBC
  • Most innovative investment bank for financial institutions group
    Winner: UBS
  • Most innovative investment bank for sovereign, supranational and agencies
    Winner: HSBC

Investment banks across the world are fighting to keep abreast of required increases to their capital, liquidity and leverage ratios. They are also grappling with deep structural changes to the market, such as the advent of central clearing and mandatory trade reporting. Many investment bankers freely admit that the days of being jacks of all trades have gone. Very, very few firms can still aspire to be leading participants in all areas of investment banking. In fact, the number of genuine competitors in some asset classes has been winnowed down to a potentially dangerous number in recent years, leading to concerns over market liquidity. Capital-intensive products are being taken off the table, asset classes are being brought into closer co-operation to save costs, and staff numbers are still under pressure. 

There are bright spots, however. Some banks, such as this year’s winner, HSBC, still maintain a strong presence across the world and in many different asset classes. Some areas of business, such as bond issuance, initial public offerings and mergers and acquisitions have had a very strong year. Innovation has been present across the board, whether as an attempt to make the market work better, as in Credit Suisse’s winning of the foreign exchange category, or in the product changes that will help meet client demands even as investment bank resources shrink. 

There is also a great deal of optimism within newer markets. The recent volatility in China has not dampened enthusiasm for the Asia (excluding Japan) region among many established Western banks. Domestic emerging market banks are also getting stronger, as witnessed by solid performances in the regional categories.  

Most innovative investment bank

Winner: HSBC

Most innovative investment bank from western Europe

Winner: HSBC

HSBC swept the board in this year’s investment banking awards. As well as being the global winner, the bank also picked up awards for being the most innovative bank in bonds, risk management, infrastructure, emerging markets, sovereign advisory and western Europe.

HSBC’s pitch book for these awards is one of the most impressive the judges had ever seen – page after page of innovative deals meticulously documented and spreading across every geography and every asset class.

In triumphing in this year’s awards HSBC has demonstrated it is best in class in what has been called the ‘product agnostic model’, whereby different product teams work together and bankers can offer clients a solution by picking and mixing skill sets.

Samir Assaf, HSBC’s chief executive of global banking and markets, says: “We were one of the first to say that investment banking is not only about mergers and acquisitions and equity capital markets. Going back before the crisis we said we have another concept and that is to start from the client and find out the client needs and then position our product offering or solution on this basis.”

The end result is that transaction banking and trading and sales work alongside capital financing, which encompasses asset finance, credit and lending, debt and equity capital markets, leveraged and acquisition as well as project and export finance.

Spencer Lake, HSBC’s global head of capital financing, says: “All of our teams work very together with the focus on solutions, not selling individual products. With all of our investment banking advisory and financing tools in one bucket, we don’t have to worry about revenue sharing between different products.”

Some of the key standouts in the 12-month review period have been the new names brought into the euro issuance market and the leading role played in re-establishing sovereigns such as Cyprus, Ireland and Portugal back in the euro debt markets following their restructurings – all of which cemented HSBC’s position as winner in the western Europe category.

On top of this have been landmark infrastructure deals, innovations in risk management, some significant bond deals in the US, notable inflation-linked deals as well as continuing strength in the dim sum market – offshore renminbi issuance – Islamic and green bonds.

HSBC made a conscious effort to attract Asian and US issuers into the euro market, which, despite the region’s economic troubles, offered an attractive cost of funds. Coca-Cola’s €8.5bn multi-tranche was the second largest euro corporate deal ever, while Mexico’s €1bn was the first ever euro century bond.

Among deals for European peripherals was a €750m five-year for Cyprus, its first syndicated new issue since its economic adjustment programme, while in the emerging markets there was Kazakhstan’s first international transaction in 14 years. HSBC was joint lead on the first non-Islamic sovereign sukuk, a £200m ($308m) five-year for the UK Treasury, and the bank also did the first green bond by an Asian issuer – for Advanced Semiconductor Engineering.

Other big innovations have been performed in the areas of infrastructure and risk management. Mr Lake says that infrastructure and green financing are the biggest asset classes with funding gaps remaining between issuers and investors. “For years we have been successfully creating solutions to bridge these gaps using bank/bond structures that increasingly have climate awareness as a driving protocol,” he says.

Under new capital rules, bank lending for long-term projects held on the balance sheet is prohibitively expensive so this has pushed them into more of an advisory role.

Among many notable deals was HSBC’s first project bond to close in the Canadian public-private partnership market to part finance a new bridge for the St Lawrence corridor. The bonds were all bought by Canadian institutions.

In risk management, the emphasis, according to Mr Assaf, is in offering solutions that are “simple and transparent”. “The time when complex derivatives could provide the answer is over,” he says. “They are likely to involve too much capital and not get approval from regulators.”

One clever deal was the splitting out of the credit portion of a long-dated inflation swap for a UK utility company, allowing HSBC to remove the mandatory break clause and hold the deal until 2038.

All in all, HSBC has excelled on many fronts and is a worthy winner of The Banker’s investment banking awards in six categories, plus gaining the big prize as the overall winner. 

Most innovative independent investment bank

Winner: Moelis & Company

It is an interesting time to be an independent, or boutique, investment bank. The industry’s larger players, struggling under the weight of burdensome new capital, liquidity and leverage requirements, are cutting back their client services in many areas. Some products have been taken out of the shop window entirely, staff numbers have been cut, and many firms are now facing the challenge of maintaining their place in the market armed with far fewer resources. 

A great opportunity, then, for smaller participants to come in and disrupt things even further by challenging their bigger competitors. Moelis & Company has met this opportunity by consolidating in areas such as restructuring and reorganisation, mergers and acquisitions (M&A), and risk and capital markets advisory. 

In M&A, Moelis & Company has participated on a number of major deals over the past 12 months. In March this year it acted as a financial advisor to DP World, a marine terminal operator, on its $3.5bn acquisition of Economic Zones World (EZW), a provider of industrial and logistics infrastructure. The transaction involved a total cash consideration of $2.6bn, and the assumption by DP World of a net debt of $859m. The parent of EZW, Dubai World, was undergoing a restructuring at the time, so maintaining confidentiality was key – Moelis designed a tailored due diligence and negotiations process to avoid press leaks, and conducted a full due-diligence evaluation of EZW prior to the transaction. 

The bank operated on the other side of the transaction when it advised brewer Heineken on the $1.2bn sale of its Mexican packaging business, Empaque, to Crown Holdings in February 2015. Moelis acted as exclusive financial advisor. The sale process was competitive, and gave Heineken the option of selling parts of Empaque, or the whole business, depending on the bids received. The bank assisted Heineken in designing the structure of the process and in negotiating long-term contracts with potential bidders, helping to drive up the value of the deal. 

“Our M&A business has been very strong this year, and I think we’ll see it continue to grow next year. M&A allows us to build a deep relationship with a client and then expand what we can offer them because we know their business inside out, and they’ve seen us perform well for them at a very important and stressful juncture,” says Ken Moelis, founder, chairman and chief executive of the bank. 

Moelis & Company is about to mark its first 18 months as a publicly listed company, with its initial public offering of April 2014 being the first for an investment bank for more than a decade. Since that date it has added additional advisory offices in Washington, DC, Melbourne and São Paulo, the latter its first in South America.

Most innovative team

Winner: Morgan Stanley

In finance, as in many other walks of life, timing is often everything. Though Cyprus’s entry into the eurozone in 2008 came at almost precisely the wrong moment for the country, its second foray into the capital markets in April this year after a dangerous flirtation with bankruptcy in 2013 was timed to perfection. Cyprus managed to offer up a seven-year, €1bn deal  to investors, and secured an affordable yield of 4.125% just months before the ongoing Greek budgetary crisis reared its ugly head mid-way through the year. 

For Reza Moghadam, Morgan Stanley’s vice-chairman in global capital markets for the Europe, Middle East and Africa region, the key mission for his team as bookrunners for the deal was convincing potential creditors that Cyprus was not Greece, and would not be sucked into further instability should events in Greece take another turn for the worse. 

“Coming back to the market was a sign of success, a sign that Cyprus’s reform programme had worked,” says Mr Moghadam, who led the International Monetary Fund’s response to eurozone budgetary crises until July 2014. One key aspect of the reforms that needed to be completed before Cyprus could go to the market with confidence was the changes to the bankruptcy and foreclosure laws that were necessary to deal with the bad assets lurking in the country’s banking system. 

With Cyprus led by a minority government, passing this law through its parliament took several attempts, but Mr Moghadam says it was worth the wait. “We were all anxious for Cyprus to tap the markets as soon as possible before summer because of rising concerns regarding Greece. The passing of the bankruptcy reforms allowed us to both bring the deal to the market and pitch to more traditional, long-term investors,” he says.

Persuading investors was still a tough ask for Mr Moghadam’s team. “The country’s 2013 crisis was still very fresh in people’s memories, and the link to the Greek situation was perhaps larger in investors’ minds than in reality,” he says.

Despite Greece going to the very edge of an exit from the eurozone in June and July, the price of the new Cypriot bonds held up well in the secondary market, vindicating the pitch made by Cyprus and Morgan Stanley to investors, and the timing of the issuance itself. 

“It was an attractive yield, and the stability of the price over the turbulence of the summer showed that people were happy to hold onto it. People respected the determination of Cyprus to stay in the eurozone and improve their finances,” says Mr Moghadam.

Most innovative investment bank from central and eastern Europe

Winner: UniCredit

Keeping the client’s needs at the heart of the solution-finding process through a combination of local knowhow and product expertise is a real strength of UniCredit. The bank is utilising its large commercial banking presence in central and eastern Europe (CEE) to provide clients with corporate and investment banking products not everyone can offer.

“Clients ask for solutions, not products, so you really need to be 100% aligned internally, have a broader expertise and be able to offer the full spectrum of products,” says Enrico Minniti, head of CEE corporate and investment banking at UniCredit. “Especially, private equity investors often want complex financial solutions delivered through a fast decision-making processes and we are able to offer huge underwriting capabilities across all possible client needs – from local currency facilities to guarantees, or acquisition tranches in euros or even dollars.”

One of these unique acquisition facilities was a €120m loan to finance a real estate portfolio in four CEE countries, sold by UK insurance company Aviva. Real estate is often seen as a local business, so the combination of assets in Poland, the Czech Republic, Slovakia and Hungary within one bespoke transaction underlined UniCredit’s local expertise.

Bulgaria’s first ever triple-tranche bond offering was another first. The €3.1bn bond deal was split into seven-, 12- and 20-year maturities, with the longer tenors being Bulgaria’s longest bond obligations to date, while the coupons on the shorter bonds were the sovereign’s lowest on the international market. 

Public-private partnerships are another area of strength for UniCredit. Together with the Turkish authorities, the bank created a framework following Western standards, which has been used in several transactions in Turkey and there is growing interest in also utilising it for infrastructure projects in other CEE countries, according to Mr Minniti.

UniCredit is also a leading advisory business in CEE, having worked on more mergers and acquisitions (M&A) in the region in 2014 than any other bank. The unique restructuring and sale of Slovenian brewery group PivovarnaLasko highlighted UniCredit’s breadth of capabilities – the transaction included three non-core disposals to separate acquirers, as well as the sale and recapitalisation of Lasko Group itself through a takeover by Dutch brewer Heineken.

“There are a number of restructuring cases in the region and whenever we think there is value we intervene,” says Mr Minniti. “More clients recognise the value of M&A advisory in these situations, asking for a structured and professional approach to transactions and scouting opportunities across our region. 

“We are uniquely positioned to support our clients on the ground, bringing together local presence, a pan-European approach and the close coordination with other relevant products of the bank.”

Most innovative investment bank from North America

Winner: Bank of America Merrill Lynch

For Christian Meissner, head of global corporate and investment banking at Bank of America Merrill Lynch (BAML), the bank’s success in North America this year can be traced back to the trials and tribulations of the financial crisis. The shotgun wedding that put Bank of America and Merrill Lynch together in early 2009 forced the new entity to go through an intense period of reorganisation, a process that hit the investment banking side of the business harder than most. Costs had to be reined in, new objectives laid out, and new challenges grappled with.

As a consequence, BAML cut its cloth to the new realities in investment banking – higher capital requirements, more onerous regulation and tighter margins – earlier than most of its competitors, who in many cases are still struggling to adapt to the environment in which they now operate. “We are starting to reap the rewards since our turnaround following the crisis,” say Mr Meissner. “We virtually redefined our firm from 2009 onwards and have a clear direction and focus.”

One area of strength of BAML in North America is the equity markets. It tops the table of North American initial public offerings, notching up 256 to JPMorgan’s 244. It is also out in front in the number of ‘jumbo’ deals worth $500m or more, with 91 such transactions under its belt this past year. The bank also has a strong record in deal innovation, pioneering the structuring of ‘yield cos’ and taking a leading market share position in its issuance. 

Debt capital markets have been another positive story for the bank in 2015. It has maintained its dominance in private placements, and is the leading bank for US corporates issuing in euros, a trend that has gathered pace throughout 2015 even as the Greek debt crisis once more came to the fore. BAML has also taken a leading position in green bonds underwriting, and as an underwriter of structured notes.   

Meanwhile, Mr Meissner is confident that 2016 will offer plenty of opportunities for the bank in its home market and elsewhere. “The US economy is in good shape. We’re always vigilant regarding macro issues, such as growth issues in China or Latin America, but overall we’re feeling optimistic about next year from a revenue perspective,” he says.

Most innovative investment bank from Latin America

Winner: Itaú BBA

Confirming its position as Latin America’s dominant capital markets house, Itaú BBA has secured an impressive portfolio of deals over the past year, spanning from leading roles on equity and fixed-income transactions to advisory work on large acquisitions. 

Being able to provide services across capital markets and investment banking to clients, both in Latin America and abroad, is at the centre of Itaú’s strategy. Telefonica Brasil’s $9.8bn acquisition of GVT is a prime example. The bank not only advised the bidder, it also served as joint-bookrunner on Telefonica’s follow-on $5.46bn equity issue – by far the largest equity issue in Latin America between June 2014 and May 2015.

 “We were able to win the advisory role on the Telefonica acquisition in Brazil, and also led its follow-on. This is exactly the kind of bank we want to be to our clients,” says Jean-Marc Etlin, CEO of investment banking at Itaú BBA. “When something large happens in Latin America, we aspire to be involved.”

  Brazil, Itaú’s domestic market, has indeed traditionally supplied record-breaking deals to banks and investors. Itaú has forcefully ridden the wave of large transactions. It has also developed a formidable presence across Latin America, where most economies have been growing fast, thanks largely to the past buoyant commodities cycle. But plummeting prices for raw materials as well as oil, and reduced demand from China, have badly hurt Brazil and damaged Latin America in general. Mr Etlin, however, remains positive about macroeconomic fundamentals for many of the countries Itaú serves.

 “For the biggest investment banks working in Latin America, historically, Brazil generated 60% or more of the fee pool. Over the past few years we have seen a sharp decrease in fees, particularly in Brazil. Brazil now represents only about 45% of the total,” he says. “But prospects for the region are interesting. In most of the countries we work, there are sound macroeconomic policies and the macro fundamentals are solid.”

Most innovative investment bank from Asia-Pacific

Winner: DBS

DBS has demonstrated innovation in its investment banking business by bringing new products and issuers to international capital markets, and by exploring new jurisdictions and currencies through its transactions.

“At DBS, innovation is not limited to the technology we use; it is embedded in our DNA. It’s reflected in the way we work and the customised solutions we create for our clients,” says Piyush Gupta, chief executive of DBS.

In the equity markets, between June 2014 and June 2015 DBS sponsored the largest number of equity deals on the Singapore stock exchange. It also ranked first for both initial public offering and real estate investment trust (REIT) equity issuance in Singapore, with market shares of 21.1% and 27.1%, respectively. 

“This culture of innovation extends to investment banking, where DBS trailblazed the development of the REIT market in Singapore way back in 2002. Singapore today continues to be the biggest REIT market in Asia, excluding Japan,” says Mr Gupta. 

“We are honoured to be recognised for bringing pioneering solutions to clients across the equity, debt and strategic advisory space, and will continue to leverage our understanding of the region and markets to create value for our clients.”

DBS has introduced a number of issuers to the offshore renminbi bond market – where it ranks sixth in the Bloomberg dealer league table. Transactions include securities company Avic Leasing’s Rmb500m ($78.5m) three-year notes, a Rmb1.5bn three-year bond printed by state-owned enterprise (SOE) Beijing Automotive Industry Corporation, and Bohai Steel’s Rmb1bn offshore bond, which also marked the SOE’s first transaction in the international capital markets.

DBS also introduced Chinese names to the international US dollar bond market, arranging a debut US dollar bond for Founder Group, an investment holding group set up by Peking University. The bond consists of a $500m senior unsecured guaranteed note due in 2018. It also arranged Huawei’s inaugural US dollar deal – a $1bn, 10-year bond. Strong demand for the transaction meant order books closed at more than $9bn.

In the past 12 months, DBS has also broken into the corporate green bond market with Taiwanese semiconductor manufacturer Advanced Semiconductor Engineering, which will use the bond’s proceeds for energy-efficient manufacturing, waste management, green product development and environmentally certified commercial property projects.

Significantly, DBS has also offered support to local small and medium-sized enterprises (SMEs). In addition to arranging medium-term note programmes, DBS has led debut bond issuances for several SMEs, including fund manager Rowsley, Q&M Dental Group, resources contractor AusGroup, construction group Chip Eng Seng Corporation, real estate company Tuan Sing Holdings, rubber producer Halcyon Agri and property developer SingHaiyi Group. 

Most innovative investment bank from the Middle East

Winner: QInvest

Scooping this year’s award for The Banker’s most innovative investment bank from the Middle East is Qatar’s QInvest. Despite being a relatively young institution – QInvest was licensed by the Qatar Financial Centre Authority in 2007 – it has nonetheless left an impressive mark on both the regional and international investment banking landscape. In 2014 alone, QInvest enjoyed revenue growth of 134%, while net profits increased eight times over the previous year. 

These strong numbers were accompanied by truly innovative contributions in the sphere of Islamic finance. Standout deals from the year include work on sukuk transactions for Goldman Sachs, the first Western financial institution to tap the sharia-compliant debt markets, as well as the government of Hong Kong’s debut issuance. QInvest completed aggregate sukuk transactions to a value of $3.5bn in 2014, or about 20% of the global total. 

“Innovation is key to our success we strive to be leaders in developing new products for the Islamic market and offering investors more access, diversity and variety of investment choices than they have ever had before,” says Tamim Al Kawari, chief executive of QInvest. 

Beyond these developments, the firm executed merger and acquisition transactions to the tune of $3.1bn in 2014. These include a diverse range of sectors, from pharmaceuticals to real estate to education and infrastructure. Notably, QInvest also partners with regional private equity groups – on a co-investment basis – to enhance product development and improve its advisory flow business. 

“We align our interests with our clients, often committing our own balance sheet into developing products and enhancing our unique offering. We successfully continued to act as a gateway for investors looking to access the region’s fast-growing markets. Our team of investment bankers continued to work closely with our affiliates to further cement our capabilities with global reach,” comments Mr Al Kawari. 

Meanwhile, QInvest’s Principal Investments unit has demonstrated considerable international progress in 2015. Its real estate investments, at various stages of maturation globally, were bolstered by yielding equity opportunities in the German retail market, accompanied by additional mezzanine debt transactions in the US and considerations of new equity opportunities in the Gulf Co-operation Council region, the UK and US. 

Despite the growing volatility in global markets, Mr Al Kawari strikes a positive tone. “We remain prudent and focused on monitoring our investments carefully and executing our pipeline of deal flows, taking advantage of our unique market positioning and robust balance sheet to leverage opportunities and deliver value for all our clients and shareholders,” he says.

Most innovative investment bank from Africa

Winner: Standard Bank

For the second year in a row, Standard Bank’s investment banking franchise has landed the award for most innovative investment bank in Africa. This comes as Standard Bank has successfully executed a number of landmark deals across the continent, characterised by high levels of innovation and unmatched sectoral and geographical expertise. This success has come despite the challenges posed by dipping commodity prices and reduced demand from China on a number of African economies.

“Good revenue momentum and a growing client franchise enable us to take great confidence into the future. Standard Bank’s recent interim results show how we continue to assist clients in weathering the challenges caused by the economic slowdown. Our Africa portfolio is yielding dividends as a result of diversification,” says Bill Blackie, head of investment banking and client coverage at Standard Bank in South Africa. 

In one of the bank’s more complex deals in recent months, Standard Bank acted as the sole South African underwriter and financial, debt and structuring advisor, among other roles, to the Oceana Group’s acquisition of Daybrook Fisheries. The deal was a highly complex cross-border transaction that had to meet US and South African funding requirements, as well as broader US regulatory requirements. The funding package, which leveraged both entities’ cash flows, included elements of US debt and South African cash and an equity bridge facility. The deal was completed in July 2015 for a value of $382m.

In west Africa, Standard Bank acted as lead arranger and security agent for Nigeria’s Seplat Petroleum for a $1.7bn debt fundraising transaction, consisting of a seven-year, $700m reserve based lending (RBL) facility with a $700m accordion feature provided by local banks, and a three-year, $300m revolving credit facility backed by international lenders. The funding was used by Seplat Petroleum to refinance existing debt, acquisitions and general corporate purposes. The deal has set a new precedent in that the RBL facility has a tenor which goes beyond the licence expiry date of the company’s core producing oil and gas leases. 

Looking ahead, Mr Blackie expects a number of challenges to emerge across the continent. “We have seen a weakening of currencies across the continent. Ordinarily this would make exports more competitive, but coupled with the decline in commodity prices, we can expect added pressure on these countries’ current accounts. Maximising returns in this environment will be a challenge; however, this also presents opportunities for us as we look to benefit from diversification across our chosen markets,” he says.

Most innovative investment bank for bonds

Winner: HSBC

One of the key talking points in the bond market throughout 2015 has been a perceived lack of liquidity, prompting fears that even a relatively minor piece of bad economic news could cause an outsized impact on day-to-day trading. Even the fortress-like liquidity of the US treasuries market has had the odd wobble on apparently calm seas, something normally unheard of.

 As far as a cause is concerned, fingers are generally pointed at banks’ reduced ability to hold positions, warehouse risk and act as market-makers thanks to higher capital requirements, though some market participants blame fragmented supply from primary issuers. However, the debt capital markets team at this year’s winner in the bonds category, HSBC, remains sanguine toward the problem. “We’re obviously aware of these concerns, but in our experience, liquidity has held up very well over the past 12 months, and primary issuance remains as strong as ever,” says Jean-Marc Mercier, co-head of global debt capital markets at the bank.

If anyone can be said to have a good view of the bond market, then it is HSBC. While other banks retract from various regions or product types due to rising cost pressures, HSBC has maintained its strong global presence and depth of service in fixed income. It has used this presence to cement its place as a leading player in Chinese renminbi issuance, with a market share of more than double its nearest competitor. It has participated in more than 65 such transactions since October 2014, a highlight being a Rmb3bn ($471.2m) issuance from the UK Treasury, the largest ever non-Chinese renminbi-denominated bond and the first from a non-Chinese sovereign. The trade helped buttress the UK’s foreign exchange reserves and highlighted the potential of the renminbi as a reserve currency.

 Other stand outs include the €5bn hybrid deal for Total, the largest of its kind ever issued in euros, and the $10bn bond for Shell, the firm’s first foray into the US dollar market since 2013 and the second largest deal on record from an oil and gas producer. HSBC was also able to bring non-European issuers to the euro-denominated market – in particular, Coca-Cola issued a multi-tranche €8.5bn deal, and Mexico released the first ever 100-year euro deal, worth €1bn.

 “These transactions demonstrate the profound depth of our fixed-income business, and our willingness to pioneer new types of issuance for a whole host of different clients,” says Mr Mercier.

Most innovative investment bank for climate change

Winner: Bank of America Merrill Lynch

In September 2014, Bank of America Merrill Lynch (BAML) nailed its colours to the climate change and sustainability mast when its chief executive officer, Brian Moynihan, spoke in front of the UN General Assembly at a specially convened summit on the subject. 

During the speech, Mr Moynihan said: “We are prepared to put our financial capital, our intellectual capital and the strength of our partnerships to work to make a meaningful contribution to addressing the global challenge of climate change.”

Since then, the bank has done a whole host of things to meet this commitment. Mr Moynihan used the speech to announce the Catalytic Finance Initiative, which saw the bank leverage $1bn of its own capital, paired with its extensive capital market expertise, to attract $9bn of investor cash for a range of projects aimed at transitioning the global economy from high-carbon to low-carbon consumption. For example, $100m has been put towards a campaign to improve the quality of cooking stoves used in the developing world, where cleaner technology will improve the health of citizens and reduce carbon emissions. 

BAML also acted as joint bookrunner for Latin America’s first green bond, a $204m offering in senior secured notes from Energia Eolica, a windfarm operator. The proceeds supported the installation of two winds farms in Peru generating a total capacity of 114 megawatts of energy. 

In fact, green bonds have been a big area of growth for BAML over the past 12 months. The bank even issued its own $600m green deal in May, a follow on from its first in November 2013, which will be used to finance energy-efficient projects. The bank was also an underwriter for the $350m green offering from Vornado, a US real estate investment trust, and the inaugural US dollar-denominated green bond from German development bank KfW, which raised $1.5bn. 

Beyond bonds, BAML launched a $400m investment programme with SolarCity, a solar panel provider for residential properties in the US. The project should make it possible for thousands of American homeowners to install solar panels with no upfront cost, and thus save money on energy bills in the future. Smaller regional banks are also being brought into this venture, bringing new capital to the sector. Alongside this, BAML acted as bookrunner to a number of acquisition and initial public offering deals within the solar panels sector. 

“The appetite for green issuance or projects has been growing among institutional investors, but also among individuals, too,” says Alex Liftman, BAML’s global environmental executive. “We have seen significant growth in our environmental and social investments by clients within our wealth management unit.”

Most innovative investment bank for equity derivatives

Winner: Société Générale

After enjoying a long bull run stretching back well over three years, developed world equity markets have experienced a slightly more rough and tumble 2015. Growth on the major global indices was solid throughout the first two quarters of the year, but a rather precarious summer has introduced doubts over the resilience of stock values in the face of troubling economic news. 

The wobbles started in Europe, as Greece’s problems pushed the eurozone back toward the cliff edge. The damage remained fairly localised, but the same could not be said of the near-collapse in Chinese equity values in August. On August 24, which even the tightly controlled Chinese media soon dubbed “Black Monday”, shares in the Shanghai Composite fell by 8.5% on the back of weak growth expectations for the country. Though the index has, at the time of writing, staged a slight recovery, by September 10 it had dropped to 3211 points from its year-to-date high of 5166 points on June 12. The panic spilled out into Western markets, knocking value off the FTSE 100, the S&P 500 and the Dow Jones. 

Rolling with these punches has been hard for banks and their clients, but the equity derivatives team at Société Générale has come through this volatile patch in good shape. “We saw the signs of trouble in China coming at end of the first quarter of 2015. Growth figures were slowing down, a lot of the strong equity performers there were very highly leveraged, which is a classic sign of a bubble, and our analysts had pointed out some valuation problems in Chinese stocks,” says Richard Quessette, global head of equities and derivatives at Société Générale.  “Because of this, we were more cautious with our exposure to China, and decided to take a more risk-off stance globally. We dramatically reduced our exposures in general and increased our stress-testing programmes. We saw a potential problem and protected our book.”

According to Mr Quessette, the business maintained its upward trajectory through the summer, having seen volumes grow by 45% in the first quarter of the year compared with the same period in 2014, and 60% in the second quarter. The team also maintained an innovative stance to client problems, using the various dangers in the equity market to design new products for clients. For instance, the team identified the strong correlation between major currency pair movements and the Eurostoxx 50 equity index during positive or negative news on Greece. Clients were given the opportunity to buy this correlation as a hedge against European equity exposure, and the use of variance swaps rather than traditional correlation swaps meant a cheaper hedge and a greater ability for clients to monitor their profit and loss on the position. 

Most innovative investment bank for equity-linked bonds

Winner: Barclays

Barclays has emerged victorious in the equity-linked bonds category thanks in large part to its joint-bookrunner role in a landmark deal at the tail-end of 2014 that involved one of the world’s largest automobile manufacturers, the spin-off of a high-profile subsidiary of the manufacturer, and was packed with some unique features. 

Prior to December 2014, Fiat Chrysler Automobiles (FCA) was not in the best of shape. Its stock was one of the most heavily shorted in Europe, and investors were worried about its ability to achieve a business plan that was relatively capital intensive compared with its competitors. Any issuance, therefore, would have to be sizeable enough to improve market perceptions and attractive enough to bring in investors. 

This is where, for the Barclays debt capital markets team, the two principal innovations of the deal come into play. First, the issuance was valued at $4bn (split between $2.875bn of mandatory convertible securities and $1.1bn of common equity), with a two-year maturity – a notable sign of confidence given the company’s recent history. Second, investors were also offered a slice of the initial purchase offering (IPO) of FCA’s Ferrari brand, which is expected to take place before the end of 2015. The precise size of that slice will be announced by FCA closer to the date of the IPO. 

“The link into the Ferrari IPO was very creative and came as a pleasant surprise to the market,” says Tom Swerling, head of crossholding origination at Barclays in London. “The share price reaction to this innovation was very positive, and gave a little bit of a tailwind to the deal. A two-year maturity on the mandatory convertible was pretty unusual, and raising $4bn for a company with a pre-transaction market capitalisation of about $10bn was very satisfying.” The convertible was priced with a 7.875% coupon and a conversion premium of 17.5%. 

The Barclays team still had to work hard to bring investors on board during the road show for the deal. “FCA is a very attractive business, and the high coupon meant the deal was always going to attract attention, but it was definitely a deal that needed selling, which is in many ways an old-fashioned art,” says Mr Swerling. “The firm was very keen to get as much of the deal to US investors as possible, as part of a wider strategic objective of expansion in the US, and was largely successful in this aim.”  

Most innovative investment bank for foreign exchange

Winner: Credit Suisse

When allegations of benchmark fixing in the foreign exchange (FX) spot market first surfaced, regulators focused on two aims – rooting out the miscreants and punishing the banks they worked for, and redesigning the one-minute fixing ‘window’, governed by WM/Reuters at 4pm London time on every trading day.

The first aim has been achieved fairly successfully. Dozens of traders at various banks have lost their jobs or been put on gardening leave pending further investigations, and fines running into billions of dollars have been levelled at some of the leading FX dealers. 

Progress on the second part has been patchier. The Financial Stability Board (FSB) recommended a number of technical changes to the benchmark process, some of which have been implemented. It also pushed for the industry to set up a central utility for the handling and matching of all benchmarking orders, but this has yet to happen, and is very unlikely ever to do so according to market practitioners. 

However, Credit Suisse has stepped into the breach and put together its own matching service that it hopes will make the benchmarking system smoother and scandal free. “When the FSB released its recommendations toward the end of 2014, we had a big internal debate about what we could do to improve the market and meet the needs of our clients. We felt that something innovative was required, so we put together the matching platform,” says Simon Brunner, head of continental European FX at the bank. 

Credit Suisse turned to AES FX, its existing FX algorithmic trading platform, and used this as the base for the new offering, AES FX Benchmarking Services, which was launched on February 16. The platform takes in benchmark orders from clients prior to the 4pm window, uses the AES algorithm to match them together as far as possible, and then executes the remainder in the open market. To ensure integrity, the whole process is entirely separate from Credit Suisse’s normal principal FX trading desk, and all orders are held in an anonymous orderbook. 

Unlike the FSB’s preferred solution of a central matching utility, the Credit Suisse system does not cover the whole benchmark market, but only those clients that have signed up to it. One can envisage a whole host of matching platforms, each run by an individual bank, serving a fragmented pool of orders, potentially reducing matching rates and increasing costs for end users.  

“The matching rate is one of the major criteria by which any system such as ours can be judged. One is never going to see 100% of orders paired up, but we’re very happy with our average matching rates of over two-thirds. That shows that the platform is robust and has enough client orders coming through its doors,” says Evangelos Maniatopoulos, global head of AES FX product and trading.

Most innovative investment bank for project and infrastructure finance

Winner: HSBC

While lenders’ appetite for long-term debt may have resumed after a lull following the onset of the financial crisis, project and infrastructure finance portfolios such as HSBC’s are still rare. Whether in the UK, the US, China, Mexico, Côte d’Ivoire or Saudi Arabia, HSBC has consistently delivered innovative structures and astute advisory work. More importantly, the bank has strived to create a well-rounded global project finance team – a team that is indeed led by experts from two separate product areas.

“Most banks would say ‘I’d like to sell you a project finance solution, or a corporate finance solution, or a bond solution’. We listen to clients, understand what their major issues are, and structure deals that go to the heart of where they see risk,” says David Gardner, co-head of the infrastructure finance group at HSBC and global head of project and export finance.

“It’s very important, from a client perspective, that we are product agnostic,” adds Scott Dickens, co-head of HSBC’s infrastructure finance group and global head of structured capital markets. “We’ve done a good job in creating a global team that has a mixed product mindset and is focused on creating innovative solutions.” 

They expect innovation to accelerate as banks work more closely with multilateral organisations such as the World Bank, the Inter-American Development Bank or the newly created Asia Infrastructure Investment Bank. 

With the multilaterals’ backing, new financing methods can be more easily exported and adapted to different countries’ needs. The aggregator devised to finance the building of a group of schools in the UK is a prime example, says Mr Dickens. The feature is part of the UK’s revised private finance initiative, PF2, which groups individual deals together to seek investment and aims at increasing competition between financing sources to reduce price. After no transaction closed in the education sector since the scheme was launched at the end of 2012, HSBC successfully advised the UK Education Funding Agency on its first PF2 project – a £600m ($931m) deal that bundles together the construction of five schools. Similar structures can be used in other countries, attracting both equity and project bond investors.

“A lot of these techniques can be exported [elsewhere],” says Mr Dickens. “And that’s where the bank can really assist the market. There’s a real momentum behind infrastructure financing globally right now.”

Most innovative investment bank for IPOs and equity raising

Winner: Deutsche Bank

Equity issuance enjoyed a very healthy year in 2014, as many deals that had been put on the shelf during the financial crisis and ensuing recessions worked their way through the market. At the start of this year, there were doubts whether this pace could be maintained, but 2015 has, so far, proved to be an even better period. In the first half of the year, equity issuance was up 47% on the same period in 2014. 

“Issuance in the first quarter was very strong, particularly in Europe,” says Ed Sankey, European co-head of equity capital markets at Deutsche Bank in London. “The second quarter was also positive, but didn’t quite continue the furious pace of the first. The past few months have been slower due to the normal summer lull, and the dislocations caused by worries over Greece and China.”

Initial public offerings (IPOs) have been a major contributor to this strong performance, as companies take advantage of solid economic growth in many developed countries and investors look for extra liquidity in the equity market. 

Deutsche Bank has been at the forefront of this market, coming first in financial data provider Dealogic’s IPO dealer league table. Mr Sankey’s team has had a hand in three of the biggest deals to hit the market over the past 12 months – Autotrader, Pershing Square Holdings and Sunrise Communications. 

Autotrader’s was the largest UK sponsor IPO on record, a £1.4bn ($2.17bn) deal in March this year. Deutsche Bank was the sole sponsor, the joint-global coordinator and bookrunner for the transaction, which was in very high demand from a range of investors. The IPO priced the firm at a value of £2.35bn, and its shares performed well in the secondary market after the flotation. 

Deutsche Bank was also joint global coordinator and bookrunner for the October 2014 Pershing Square Holdings deal, the largest ever IPO for a closed-end European fund. Clocking in at $3bn, it was the largest flotation on the Amsterdam Euronext since May 2006. The bank acted in a similar capacity for the SFr2bn ($2.06bn) Sunrise Communications IPO in February this year, the largest telecommunications IPO in the Europe, Middle East and Africa region since 2004 and the largest IPO in Switzerland since 2006. 

“One of the most rewarding aspects of our largest IPOs this year was that we were able to upsize them significantly, something not often seen in Europe, without a negative impact on their valuation. It proved that access to liquidity is still a big deal for investors,” says Mr Sankey.

Most innovative investment bank for Islamic finance

Winner: CIMB Islamic

Over the past year, the Islamic finance industry has maintained its positive growth trajectory. With the total value of global sharia-compliant assets hitting $2100bn at the end of 2014, backed by a compound annual growth rate of 17.4% between 2009 and 2014, sharia-compliant Islamic financial institutions have shrugged off many of the challenges faced by their conventional peers. The winner of this year’s most innovative investment bank for Islamic finance, Malaysia’s CIMB Islamic, is no exception to this trend. The bank has maintained its position at the forefront of Bloomberg’s Malaysia, Association of South-east Asian Nations and global sukuk league tables in terms of the number and volume of total issuances.

“The [industry’s] growth story was complemented by trends that suggest a deeper and more sustainable Islamic finance ecosystem. On the sukuk front, 2014 was not only the best year ever in terms of the total size of the issuance but it also witnessed newcomers to the global sukuk issuance, namely the Hong Kong, the UK, Luxembourg and South African governments, sending strong signals to the markets on the growing acceptance for and attractiveness of Islamic finance as a whole,” says Mohamad Safri Shahul Hamid, senior managing director and deputy chief executive of CIMB Islamic.

CIMB Islamic has executed a number of transformative deals in recent months. These include the government of Malaysia’s $1.5bn issuance in April 2015, comprised of a $1bn, 10-year and $500m 30-year tranche. As such, this was the longest tenor ever issued by a sovereign sukuk. The deal was also innovatively structured under the principle of wakala, employing sharia-compliant commodities, leasable assets and non-physical income generating assets. The two tranches were seven times and six times oversubscribed, respectively.

In September 2014, CIMB Islamic acted as sharia advisor, joint-lead manager and joint-bookrunner on Khazanah Nasional’s exchangeable sukuk transaction. This deal represented the first ever exchangeable sukuk structure based on the principles of mudarabah and murabahah, while it was also the world’s first ever seven-year put four exchangeable sukuk to price at a negative yield. With an issue size of $500m, the order book was 1.6 times oversubscribed. 

Despite the growth of the Islamic finance market, a number of challenges remain on a global level. In particular, there remains scope for growth in many of the world’s more developed financial markets. “More and more jurisdictions would need to accept and embrace Islamic finance before we can call it a globally accepted offering,” says Mr Mohamad. “We welcome the likes of the UK and Hong Kong governments tapping the global sukuk [market] and are hopeful that those landmark issuances would spur the growth of not only the sukuk market but Islamic finance as a whole.” 

Most innovative investment bank for leveraged finance

Winner: Goldman Sachs

Two factors have helped drive the leveraged finance market forward over the past 12 months. First, the continuation of loose monetary policies at major developed market central banks has kept high-yield, cash-paying assets attractive for investors. Second, corporates and financial institutions are moving from a defensive stance, where they have sought to take advantage of low rates to issue debt for the maintenance of capital structures, to a more offensive one that has seen many firms employ leveraged finance to achieve long-term ambitions. 

“Default rates in leveraged finance have been very low, so the fear factor is low too,” says Denis Coleman, head of credit finance for Europe, the Middle East and Africa at Goldman Sachs. 

“Issuers are taking the opportunity to strategically think about their financing needs and ensure their capital structure is robust and appropriate while market conditions are supportive. Refinancing has driven a substantial amount of volume, but we have also seen a significant level of activity tied to acquisitions or other expansionary projects.” 

One exception has been the energy sector, where the oil price collapse has put firms under pressure and created distressed assets. The economic slowdown in China has had a similar effect on many commodity suppliers that count the country as their main consumer. 

Meanwhile, Goldman Sachs has focused on creating more consistency in its leveraged finance offering. 

“We’ve always been strong in high-yield bonds, but we’ve redoubled our efforts on leveraged lending activities across Europe and the US. We want to be able to offer our clients a tailored solution that is product agnostic – loans or bonds, whichever they prefer. We have made a lot of progress in this area and have materially increased our market share,” says Mr Coleman.

Mr Coleman’s team has a strong presence in multiple regions, and has had a hand in a huge variety of transactions in 2014 and 2015 – refinancing deals for retailer Toys R Us and Altegrity Risk International, a debt-based initial purchase offering for Norwegian tourism operator Hurtigruten, and financing for the acquisition of UK gambling firm SkyBet. 

Mr Coleman is also excited about the recent entry of Asian participants to the leveraged finance market. 

“Recently there has been very little large-scale leveraged finance activity in Asia, but in the past year we managed to complete a number of deals originating from this region. We expect Asia to become a bigger area of activity. There is an obvious growth of Asian-focused and Asian-domiciled financial sponsors who are finding it attractive to source funding for their portfolio companies by accessing the capital markets on a global scale rather than solely relying on more traditional Asian banking syndicates,” he says.

Most innovative investment bank for mergers and acquisitions

Winner: Citi

Mark Shafir, global co-head of mergers and acquisitions (M&A) at Citi in New York, thinks of himself as one of the more pessimistic inhabitants of Wall Street, but after a very healthy 2015, even he is optimistic about what lies ahead for the M&A market. 

 “[This year] is likely to set a new record for M&A activity, topping the previous one set in 2007. It has been mainly driven by North American corporates, which are seeking growth on the buy side and value maximisation on the sell side. There have been a lot of large, strategic deals worth $10bn or more coming through this year, and the market hasn’t been too badly affected by the volatility in August,” he says.

Europe has lagged slightly behind on the M&A front, but Mr Shafir believes there is more to come from the continent. “The European market has performed okay, but there is still a huge amount of untapped M&A volume there, possibly as much as $400bn,” he says.

Mr Shafir also believes that, if the equity markets find some stability and the US Federal Reserve pursues a dovish path with regard to rates rises, there is more strong M&A performance to come in 2016. “The market still has legs, I’m fairly confident about that. Although there has been some consternation from investors on valuations, I don’t think we’ve seen the peak of this cycle. There is still a lot of appetite for strategic decisions and consolidations in many parts of the corporate sector,” he says.

Citi has overseen a number of significant M&A deals over the year, including the acquisition of New Britain Palm Oil by Sime Darby, the largest acquisition in that sector since 2007. Part of the challenge was securing the blessing of the government in Papua New Guinea, where New Britain Palm Oil is based, and convincing the various stakeholders in New Britain Palm Oil to accept the deal. 

Citi also had a hand in the merger-of-equals between Orbital and ATK’s aerospace and defence groups. The deal was valued at $5bn, and saw the innovative use of a Morris Trust structure, which allows a corporation to dispose of unwanted assets without incurring tax on the gains from those assets. This had a hand in the immediate valuation gain for both Orbital and ATK on the stock market when the deal was announced. 

Most innovative investment bank for private placement

Winner: Bank of America Merrill Lynch

In the British Empire’s heyday, the Royal Navy pursued a policy by which it always had more ships than the fleets of the world’s next two largest navies combined, thus ensuring that it continued to rule the waves. In the private placement market, Bank of America Merrill Lynch (BAML) has managed to repeat this trick, building a market share of 29.5% that is in fact almost more than its next three competitors combined.

According to Stephen Monahan, global head of private placements at the bank, his team has managed to build on this dominance in 2015. “We’ve had a fabulous year, perhaps our best ever,” he says. Mr Monahan puts this down to experience. “We have a very stable headcount. Our private placement managing directors have been at the bank for an average of 27 years, so they know the market inside out and can call on a vast wealth of knowledge to get the job done.”

The private placement world is not a large one. It spans roughly 70 institutional investors, mostly from the US life insurance sector, who require predictable, long-term sources of funding to match their liabilities. That makes for a relatively stable, low-volatility market, especially when compared with public debt issuance. However, there have been some gradual changes this past year. 

“We’ve seen an increasing number of cross-border or multi-currency transactions in the market. Perhaps about 15% of deals now have a non-dollar component to them,” says Mr Monahan. “We’re also seeing more participation from midcap issuers. Off-the-run corporates doing mid-sized deals are finding that the private placement market is very receptive and eager to access those kinds of borrowers, and can be a place to find good pricing. That’s especially true for infrequent issuers, who might have to depend on a good day in the public market for a successful issuance.”

Private placement is, unsurprisingly, a fairly opaque market. A high premium is placed on discretion, making it difficult for Mr Monahan to shout about the details of successful deals from the rooftop. However, over the past year the team has executed more than 70 transactions for a broad range of clients around the world. Australia has been a particularly fertile ground, with about a dozen of these deals coming from issuers in the country. It has also brought complex, highly structured deals to the market, and ushered in ‘breakthrough’ transactions from participants in the sports sector and beyond. 

Most innovative investment bank for restructuring

Winner: Rothschild

Globally, the restructuring and recapitalisation team at independent investment bank Rothschild completed 37 deals between June 2014 and June 2015, involving about €44bn of debt. It also has more than a dozen deals on the burner, totalling roughly €20bn of debt.

The restructuring business is a core part of the bank’s wider business model, allowing it to construct a wide presence across a variety of different markets. It has had a strong year in developed world economies, with key deals being the £2bn ($3.07bn) recapitalisation of UK outsourcing company Serco, the €450m restructuring and €220m recapitalisation of Italian real estate firm Aedes, the €1bn recapitalisation of Euro Disney, and the $460m debt restructuring and $115m rights issue of Australian mining operator Mirabela Nickel. 

However, it is in emerging markets that Rothschild has really flexed its muscles this year. The bank advised the Al Jaber Group, a large United Arab Emirates-based conglomerate with business lines in construction, the petrochemical industry and infrastructure, on its $4.5bn restructuring. The group had defaulted on a debt repayment in 2011 after a crisis of confidence in the UAE real estate market. Lenders consequently stopped rolling over short-term exposures and asked to be repaid immediately. The restructuring involved the extension of existing bank facilities across more than 50 group entities across multiple jurisdictions. Rothschild played a key role in securing the necessary 100% consent from the firm’s lenders, which took more than three years due to the absence of insolvency law in the UAE. The bank also helped Al Jaber define a long-term business plan.

Rothschild also played a key role in advising the refinancing of Budapest Airport, privatised in 2005 and owned by a consortium of investors including German development bank KfW. Completed toward the end of 2014, the deal involved €1.1bn of senior bank facilities provided by a set of 15 lenders and €300m-worth of ‘pay if you can’ junior notes, the first of their kind issued in Hungary. There was also a restructuring of interest rate swaps with a notional value of €770m. 

The bank provided strategic advice to Ukrainian gas firm Naftogaz, and to the holders of $700m-worth of debt from Mriya, a Ukrainian agro holding company during a period of intense economic and political stress in the country. 

It was also involved in the $480m restructuring of Brazilian petrochemicals company Unigel, just one instance of its strong presence in oil and gas market over the past year as the fall in the price of these commodities has pushed many firms towards default.

Most innovative investment bank for risk management

Winner: HSBC

HSBC executed a wide geographic spread of transactions, which also tackled some of the key issues facing investment banks and their clients. Top of that list is the regulatory pressure on bank balance sheets.

The UK-based lender devised a way to bifurcate an existing long-dated inflation swap for a UK utility company. The swap contained a mandatory break clause to reduce the credit exposure for the bank, but this made it less suitable for the client.

The bifurcation separated the credit-intensive inflation accrual elements of the swap into a special purpose vehicle that then issued zero coupon bonds to a real money investor. HSBC retained the residual swap cash flows without the break clause. The bank is already looking to utilise the bifurcation technique for new hedges and new products, including long-dated cross-currency swaps. 

“The traditional demarcation lines within banks between the asset and liability sides, and between the corporate and financial institution clients, are breaking down. We need to take a holistic view that enables us to provide clients with bespoke, cost-effective products, while optimising capital efficiency for the bank,” says Shahrear Haque, Europe, Middle East and Africa head of corporate rates sales at HSBC. 

Expansion in the project finance market is another important theme. In 2014, HSBC advised a US project sponsor with sales contracts that created 20-year interest rate exposures. The bank was joint lead on a hedge for one of the largest ever deal-contingent interest rate swaps, leading to two further mandates for HSBC in 2015.

“Deal-contingent derivatives have been around for a while, most commonly in the form of foreign exchange forwards around merger and acquisition transactions. The rise of deal-contingent interest rate swaps, especially in the US, is more centred around project finance opportunities. It is of the utmost importance to join together our derivatives knowledge with the project finance coverage teams who have the expertise on the specific project related risks underwritten,” says Guido Hebert, global head of fixed-income structuring at HSBC.

Finally, low European interest rates mean many companies are sitting on cash surpluses but lacking obvious investment opportunities. In March 2015, HSBC advised a transport company to use excess cash to pay down future liabilities on existing swaps that were in the money to the bank. This released the bank’s credit reserves against these positions, enhancing the effective yield on the client’s cash. 

“We have since undertaken several more of these transactions with different clients. These relatively simple structures provide a capital-efficient way of enabling our clients to earn a yield that is better than they could earn on cash deposits,” says Mr Haque.

Most innovative investment bank for securitisation

Winner: Deutsche Bank

For Daniel Pietrzak, the co-head of structured finance at Deutsche Bank, one of the biggest challenges for banks participating in the securitisation market over the past few years has been rebuilding an investment base that, particularly in Europe, was shattered in the aftermath of the financial crisis. That effort continues, and Deutsche Bank can claim some success with it. 

“This rebuild has had to take place across all securitisation areas – commercial mortgage-backed securities [CMBS], residential mortgage-backed securities, collateralised loan obligations,” says Mr Pietrzak. 

“We’ve made a very successful shift from the hedge fund community to real investors, who are now clamouring for investment-grade products backed by returns from everyday economic sectors such as real estate or auto loans.”

That shift has borne particular fruit in the US, where the steady economic growth in recent years has brought securitisations based on consumer behaviour back into play. “Due to the low-[interest-] rate environment, there is a dearth of high-yielding fixed-income products out there. Real money investors such as insurance and pensions funds are more and more willing to assign long-term pools of capital to these kind of products and accept a greater level of risk,” says Mr Pietrzak. 

In terms of breaking new ground and bringing innovation to the market, it has been a particularly strong 12 months for the Deutsche Bank securitisation team. It acted as sole structuring advisor and sole coordinator to the issuance of €125m of additional Tier 1 securities by Irish bank Permanent TSB, the first ever of its kind in Ireland. It also led the Bank of Ireland’s Ä750m additional Tier 1 issuance in June 2015, a perpetual bond priced with an attractive coupon of 7.375%. 

Elsewhere in Europe, it led the first multi-loan CMBS issuance since the financial crisis in June 2014, a €355m deal that securitised three separate loans to investment and advisory firm Blackstone to finance office assets in Italy. 

Deutsche also led the first multi-borrower CMBS in Europe since the financial crisis, a €250m transaction backed by Dutch real estate assets, and put together the largest sterling CMBS deal since the financial crisis, a AAA rated, £750m ($1.16bn) issuance for UK retail real estate operator Westfield Stratford City Finance. According to figures from financial data provider Dealogic, Deutsche Bank has arranged more CMBS deals in Europe than any other bank. 

“We have built a significant market share in both the US and Europe, and have focused on building a consistent operation that gives clients the flexibility to pursue any securitisation solution that they feel is necessary for their business,” says Tom Cheung, Mr Pietrzak’s fellow co-head of structured finance at Deutsche. 

Most innovative investment bank for structured investment

Winner: BNP Paribas

At BNP Paribas, much of the past 12 months has been spent knitting together a new structure for its institutional and corporate banking business – one that will see equities, commodities and fixed-income trading brought closer together under the ‘global markets’ roof. 

At the same time, the bank’s structured investment products team has also undergone reorganisation on a smaller scale, bringing in a cross-asset approach to its prime banking and distribution platform. 

“The clients for this service, typically private banks and retail banks who then pass the products on to their own customers, put a greater focus on the quality of service they receive from us, and the digitalisation and automation of our various products. This is true across all underlying instruments, so going cross-asset to develop those service and digitalisation platforms makes a lot of sense,” says Jean-Eric Pacini, head of equity derivatives sales at BNP Paribas.

Mr Pacini’s team has also swiftly adapted to a structured investment product market that is increasingly taking on an ‘hourglass’ shape – lots of smaller, more automated products at one end, a growth in larger, advisory-led deals at the other, and a hollowing out of the medium-sized products in the middle. This has come about, in part, because of rising cost pressures at client banks, and presents some challenges to product providers. 

“We have to deploy our ‘hourglass’ model across asset classes,” says Mr Pacini. “Indeed, historically we have set up two clearly segmented teams, one for the advisory end and one for the automated end. The teams at the advisory end are in charge of promoting innovation and value-added services, and the revenue stream is set up in such a way that each country head is incentivised to choose the best option for their clients.”

In terms of product innovation, the structured products team has been busy helping clients boost returns in a low-rate, low-volatility environment by designing a series of bespoke equity indices comprised of dividend-paying stocks. Products involving these indices offer capital protection, a particularly attractive feature for many investors in continental Europe. 

The team has focused on developing ethical investment products, and has constructed two ethical equity indices. It has also partnered with the World Bank to issue equity-linked green bonds, the first of their kind. These products have raised more than $500m. The investment is channelled to anti-climate change projects around the world, and the equity portion offers returns through BNP’s ethical equity index. 

Most innovative investment bank for consumer and retail goods

Winner: Bank of America Merrill Lynch

Bank of America Merrill Lynch (BAML) has won this year’s consumer and retail coverage category, notching up nearly 500 capital-raising and advisory engagements worldwide over the past 12 months.

It is an impressive statistic, one that, according to BAML’s global head of consumer and retail investment banking, Lisa Clyde, is thanks in part to a strong performance in this market in 2015.  

“Last year was a particularly robust year for consumer and retail, particularly with regard to mergers and acquisitions. Though not by a large margin, activity so far in 2015 is up and there is a very healthy pipeline of deals expected to come to market in the next few months,” she says.

What is perhaps most heartening for market participants is that the global volatility unleashed in August by weakness in the Chinese equity markets has not had too disruptive an effect on the sector. Two-thousand and fourteen saw an incredibly strong start to the year, followed by some late-summer volatility that took a lot of potential deals off the table for the rest of that year. Though there has arguably been a worse bout of late-summer volatility in 2015, it has not knocked the market out of shape too badly. 

In terms of stand-out deals, Ms Clyde has a long list to choose from. In October 2014 the bank acted as joint-lead arranger and lead left bookrunner for the highly complex financing deal behind the $9bn merger of two US supermarket firms, Albertson’s and Safeway. The transaction involved $1.14bn-worth of senior secured eight-year notes, a $3bn revolving credit facility and three term loans totalling $4.8bn. 

It also acted as sole lead arranger, sole initial underwriter and sole bookrunner for the acquisition of Big Heart Pet Brands by JM Smuckers. The financing for the deal came in the form of a $5.6bn senior unsecured bridge loan. BAML’s ratings advisory team came to the fore too – with JM Smuckers keen to maintain its investment-grade rating, as part of the deal the firm committed to a deleveraging programme over the next three years. BAML also took part in the €8.5bn issuance from Coca-Cola, the largest euro-denominated bond ever brought to market by a US company, and the $147m initial public offering of fast-food chain Bojangles.  

Most innovative investment bank for emerging markets

Winner: HSBC

The past 12 months have been a mixed bag for emerging markets. Several developing economies have endured a steady depreciation of their currencies as the US Federal Reserve gears up to raise rates and thus pull investment away from high-yielding foreign locales. On the other hand, growth is strong in some places and many new participants have been brought to the global investment market. 

HSBC’s performance is exceptionally strong across a number of different areas in emerging markets, making it a clear winner in this category. In debt capital markets, it has had a hand in innovative sovereign deals such as Mexico’s 100-year, €1bn issuance (as mentioned in the sovereign, supranational and agency category), Chile’s debut euro offering in December 2014, and Kazakhstan’s $2.5bn return to the markets after a 14-year absence in October 2014. There has also been an array of deals for emerging market corporates and financial institutions, such as a double-tranche, $9.5bn offering from Bank of China, the largest ever US dollar transaction from that particular institution. 

“One of our biggest strengths is our connectivity across different markets,” says Alexi Chan, global co-head of debt capital markets at HSBC. “We have a unique presence in all key regions of the world, enabling us to share best practice and deliver bespoke solutions to clients right across our network.” 

On the debt financing side, according to Dealogic HSBC has ranked in first place in international emerging markets for four consecutive years, and now has a 10.5% market share. It has been particularly strong in the Asia (excluding Japan) region, the fastest growing market in the world, where it has an 11.37% market share. HSBC is also number one in the Middle East and North Africa region, and has risen from number six to number three in the central and Eastern Europe rankings over the past year. 

Syndicated loans has been another hot-spot for the bank in emerging markets. Among other large deals, HSBC acted as joint-lead arranger and bookrunner for a $1.7bn, three-year senior unsecured term loan facility for Brazilian bank Itaú Verde, the largest such financing transaction for a Latin American financial institution. Thanks to a very high subscription level, HSBC was able to expand the deal from its original size of $1bn. Securitisation also proved fruitful – HSBC arranged 2015’s first automotive asset-backed security in China for Ford Automotive Finance China, and repeated the trick with a Rmb799m ($125.4m) deal for the Volkswagen Finance China Company during the volatile period for Chinese markets earlier in the year.

Most innovative investment bank for financial institutions group

Winner: UBS

Financial institutions have devoted an enormous amount of time over past five years or so to shoring up their balance sheets, increasing their capital ratios and meeting new regulatory requirements. As a result, there has been wave after wave of equity and debt issuance from this sector, particularly in Europe, where the European Central Bank’s stress tests provide a very public indication of which banks look less secure or are lagging behind others in terms of balance sheet strength. 

However, David Soanes, head of global capital markets at UBS, this year’s winner in the financial institutions group (FIG) category, believes that this type of issuance has finally begun to ebb. “It looks like we’re well past the middle of the regulatory capital raising phase. Big organisations may yet make decisions that lead them to one final round of capital raising to see them on their way, but the level of capital raised in this sector has been so dramatic that we should be nearing the end,” he says.

According to Mr Soanes, the investor appetite for financial institution paper remains strong, even after a surfeit of supply in recent years. “The continued level of investor interest has been an outstanding feature of this market this year,” he says. “The buy side, particularly in the equity space, has shown a great willingness to look to the future and buy in to a FIG investment that may take three to five years to be fully realised. In many cases, it has been willing to put up with bad short-term news or negative regulatory changes and keep buying paper. It is a testament to the overall bullishness felt toward the financial sector and, consequently, the general economy.”

Mr Soanes’ FIG team has been in the thick of that issuance this year, notching up particular success with the issuance of additional Tier 1 (AT1) instruments, which in many cases are designed as contingent convertibles bonds – these convert to equity if the issuing institution’s capital ratio falls below a pre-defined ‘trigger’ level. 

“We’re particularly proud of the fact that we have helped create demand for this type of issuance by engaging with the buy side and arbitrating between its demands and those of the issuers and regulators, which were often very different,” says Mr Soanes. In September 2014, UBS acted as joint-bookrunner to a multi-tranche, $1.5bn convertible bond from Scandinavian lender Nordea, the first public European AT1 deal with a high trigger of 8%. Similar deals were also crafted for Santander and Bank of Ireland.

Most innovative investment bank for sovereign, supranational and agencies

Winner: HSBC

Sovereign debt has perhaps never been higher on the news agenda than in 2014 and 2015, but throughout all the ructions caused by the fears of a Greek default and knock-on damage to other eurozone issuers, HSBC has continued to innovate in the sovereign, supranational and agency (SSA) space and has put together an impressive run of results.

“Governments are still under enormous pressure to tap new sources of finance in affordable ways. In a world where growth is anaemic or borderline recessionary in many places, governments have to be proactive in finding good solutions,” says Allegra Berman, global head of public sector banking at HSBC in London. “In many places, finding this financing is a way out of recession, particularly for developing countries where infrastructure spending brings growth.”

The avenues to this cash have never been more varied. More and more SSAs are pursuing sukuk issuance to bring in wealthy Middle Eastern investors, or using more structured solutions for specific projects. Earlier this year, HSBC assisted the UK Treasury in becoming the first non-Chinese SSA to issue in renminbi, a Rmb3.5bn ($550m) deal that helped to bolster the UK’s foreign exchange reserves.

“The renminbi market is very interesting. The recent instability in China, and the uncertainty over its plans to further globalise its currency, have made people quite nervous, but there is still a massive commitment from non-Chinese SSA issuers to build a presence and expertise in the market. We know it’s going to develop very quickly,” says Ms Berman.

Another landmark transaction was Mexico’s 100-year, €1bn bond, the first of its kind for the issuer, and an instance of HSBC’s significant global footprint paying off. “We have done a lot of business across many categories in emerging markets over the past 12 months,” says Ms Berman. “We have brought a number of clients to conventional and socially responsible investment issuance. We’ve also been strong in trade and project finance, particularly in Africa. We’ve been able to select very strong export finance projects in Ghana, Tanzania and other countries, and bring them to the attention of global investors.”

HSBC has also made headway in transaction banking advice to SSAs. It was selected as the sole provider of international pension payments services for the Tesorería General de la Seguridad Social, Spain’s social security agency. This involves processing more than 85,000 transactions per month to beneficiaries in 118 countries.  

Investment Banking Awards 2015 judges

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