The Banker's Investment Banking Awards, 2016

In today’s tough regulatory environment,few banks can afford to be all things to all clients. Capital buffers, know-your-customer rules, reporting systems and a host of other regulatory requirements make the business of investment banking more expensive than ever before. Banks also face growing competition from non-traditional players; corporate treasuries are arranging their own loans, bond buyers are trading electronically and asset managers are lending.

This has prompted many investment banks to overhaul their strategy by exiting non-competitive businesses, closing smaller offices and being more selective when on-boarding clients. Now, they are more focused on returns rather than revenue. At the heart of this new model of investment banking, as it has been heralded by some, is the concept of playing to your strengths. 

This year’s Investment Banking Awards reveal which of them have emerged as the strongest in 16 product categories, five coverage areas and seven regions. The winners have been selected based on their innovation, as displayed through deals and advice, and the value this brings to the client and broader market. League tables are not consulted. This has paved the way for smaller players and newer market entrants to win some of the product categories, such as Pakistan’s MCB Bank in Islamic finance and Natixis in equity derivatives.

Key themes from June 2015 to June 2016 have included the continued internationalisation of the renminbi, growing Chinese outbound mergers and acquisitions, a focus on sustainability and green finance (particularly following the global climate pact agreed in Paris last December) and the convergence of Islamic and conventional finance techniques. Record-low interest rates have prompted more creative structured products to satisfy yield-starved investors, and the UK’s referendum on EU membership sparked more corporates to implement hedging arrangements. Market volatility returned, placing a premium on banks’ ability to find pockets of liquidity. Argentina re-entered the international capital markets after 15 years of financial exile and troubled financial institutions developed new ways to prop up their balance sheets.

From the pitch books and interviews, it is clear that investment banking is more client-centric than ever before. This commitment has led to bold and market-opening deals, helping clients and economies reach their potential.

Most innovative investment bank

Winner: Citi

Most innovative investment bank from North America

Winner: Citi

It has been a remarkable 12 months for Citi. The US bank has excelled across the board, picking up awards in four categories in addition to being named the overall global winner. “Citi is honoured to be recognised by The Banker as most innovative investment bank. Our mission is to enable growth and progress by serving as a trusted adviser to our clients,” says James Forese, president of Citigroup and head of the institutional clients group. “We are proud of our ability to offer our clients insightful, innovative solutions in a complex and constantly changing environment.”

In a year marked by macroeconomic shocks and economic uncertainty, Citi’s extensive markets business was the linchpin of the bank’s success. “Our global platform provides us with a unique view on growth, interest rates, oil and commodities, and foreign exchange. That gave us the best read of the markets during this window,” says Tyler Dickson, global head of capital markets origination at Citi. “While many banks have become regionally focused, Citi has remained uniquely global – and that’s made us extremely well positioned to connect our most important clients to the best opportunities.” 

Citi’s ability to access pockets of liquidity in volatile financing markets has allowed the bank to do transactions many of its rivals would have struggled with. It had lead roles on benchmark project bonds issued to fund airport expansions in New York and Panama, and a public transport system that will transform Lima. In October 2015, Citi led on First Data’s initial public offering, which raised $2.6bn to become the year’s biggest. This was at the height of market volatility, a time when many other deals were withdrawn.

Citi continued its leadership in the special purpose acquisition companies (SPACs) space. The $600m CF Corporation listing was made more competitive by privately placing the first tranche, and in September 2015 it structured the first SPAC by a top-tier private equity firm – TPG. “Citi helped create the SPAC market and has driven innovation in the space over the past decade. We learned a lot from our successes and challenges, and we have consistently worked to improve the product for issuers and investors. Most recently, we improved the quality of SPAC sponsor issuers, the attractiveness of the structure to fundamental investors, and its competitiveness in merger and acquisition [M&A] processes,” says Mr Dickson.   

In debt capital markets, Citi helped the Omani government sell its first bond in 20 years and was a key player in Argentina’s return to the global capital markets. In March 2016 – one month before the national government’s landmark issuance – the bank led the province of Buenos Aires in pricing $1.25bn of senior unsecured notes due in 2024. Citi has cemented its status as a leading provider of oil hedging for sovereigns – of particular importance given the current price volatility – recently creating solutions for Mexico as an oil exporter and Jamaica as an oil importer.

A lot of the bank’s innovation is for big clients with which Citi has a long-established relationship. An example is General Electric’s (GE’s) disposal of its GE Capital assets over a 24-month period to shed its designation as a systemically important financial institution. “The opportunity was to provide good strategic advice and financing support to GE, a long-standing banking client of Citi. We needed to ensure GE had access to the best combination of private market M&A and public market alternatives to allow its assets to be separated and monetised attractively,” says Mr Dickson. “In some cases, we helped GE sell and in others helped buyers buy through creative financing solutions… The fact that we understood the client’s businesses and assets globally, and could execute in multiple geographies on a product-agnostic basis, allowed us to provide unique one-stop servicing.”

This ability to bring together its best ideas, structuring solutions and intellectual capital to create a holistic solution underlies the bank’s client-centric business strategy. “Citi is particularly skilled and experienced at serving the needs of large corporates, financial institutions and governments, which represent our core client base,” says Mr Dickson. “We strive to be outstanding in all the products that these clients want to use. That naturally drives us to focus on innovating and providing best-in-class services across all the major capital market trends.”

Most innovative independent investment bank

Winner: Rothschild 

As a number of universal banks scale back some of their investment banking operations, in response to stringent and capital-intensive regulatory reforms, the independents are taking a bigger share of the banking wallet. While some are still small enough to warrant the ‘boutique’ label, others are growing significantly in headcount and global footprint, shaking up the investment banking landscape.

Rothschild helped pioneer this trend, and based on its awards pitch book, is ahead of its competitors. “We are in a unique position globally, in that we combine the size of the integrated banks with the independence model. We also have an unrivalled geographic reach and the ability to deliver merger and acquisition [M&A] advice either decoupled or combined with financing advice,” says Robert Leitão, head of global advisory at Rothschild & Co. 

Rothschild’s recent track record spans the full range of clients, sectors and markets. It advised Corporación GEO on its $2.9bn restructure, the first under Mexico’s new bankruptcy regime, and the state-owned Hellenic Financial Stability Fund on the €14.4bn recapitalisation of Greece’s biggest four lenders. Rothschild was instrumental in the notoriously complex €23.1bn merger of Europe’s three Coca-Cola bottlers, and the privatisation of Poste Italiane via a €3.36bn initial public offering – Italy’s biggest in more than 15 years. It has also been at the forefront of the China outbound story, having a key advisory role on ChemChina’s €8.8bn acquisition of a controlling stake in Italy’s Pirelli.

In terms of deals that best exhibit Rothschild’s strengths, Mr Leitão highlights Abu Dhabi-based Al Noor Hospitals Group’s combination with South Africa’s Mediclinic International via reverse takeover. “[This] is a great example of us bringing our geographical coverage and knowledge of the sector and capital markets to bear, in a multi-national, complex cross-border transaction involving M&A with a simultaneous relisting,” he says.

Going forward, Rothschild is focused on growing in the US, where it has made some key hires – most notably James Neissa, who left UBS to become Rothschild’s North America head. “Our strategic focus is to build on the strong platform of our market-leading European business in order to grow our business in North America, the largest market in the world,” says Mr Leitão. 

Most innovative team

Winner: Standard Bank

The debt primary markets team at Standard Bank has played a leading role in the development of sub-Saharan Africa’s bond markets. In a region where capital is in high demand, the Johannesburg-headquartered bank has been instrumental in helping corporates and financial institutions sell debt overseas, and expanding local capital markets. 

The latter is something that Standard Bank takes very seriously. “Our perspective and role in building local currency capital markets is driven by our view that it’s the secret to unlocking the real growth dynamic in these countries,” David Munro, Standard Bank’s corporate and investment banking chief, told The Banker in August. 

In November 2015, Standard Bank helped the government of Ghana raise 516.5m cedis ($130m) in the local markets in the country’s first domestic sovereign bond to be sold via bookbuild format. The bookbuild process created transparency that allowed the issuer to make timely decisions about size and yields, and enabled the bookrunners to achieve better pricing than the pre-bookbuild indications. Standard Bank was lead arranger on Mozambique’s only listed bonds this year – a 201.5m meticais ($2.58m) issuance in April and 113.5m meticais issuance in June by Bayport Financial Services. A wider than usual bookbuild period was used to create greater deal certainty, in light of the difficult market conditions. Since then, other arrangers have adopted the same tactic.  

In Nigeria, Standard Bank has continued to advance the domestic commercial paper market. It issued the country’s first commercial papers in 2012, and since then has helped the likes of Skye Bank, Nigerian Breweries, Guinness Nigeria and Transcorp Hotels set up their own programmes. Elsewhere, it has helped Tanzania’s biggest bank issue its first domestic bond targeting retail investors and assisted the International Finance Corporation in becoming the first non-resident to raise debt in Namibia’s capital markets. 

Standard Bank has been a key player in the wave of Eurobonds issued by African sovereigns in recent years, and the past 12 months have been no different. It helped Namibia’s government raise $750m in October 2015, a time when investors were wary of emerging markets, and in May 2016 it was joint lead manager and bookrunner on the West African Development Bank’s debut Eurobond. Despite being relatively unknown among international investors, the deal attracted $1.8bn of orders, which allowed the bank to upsize the bond from $500m to $750m.

Most innovative investment bank from western Europe

Winner: HSBC

While some European investment banks face serious capital challenges, HSBC is going from strength to strength. This is a testament to the bank’s global universal banking model. “Our business is not too reliant on any one part of the world that has seen low growth for a consistent period,” says Robin Phillips, HSBC’s co-head of global banking. “We can connect multi-national customers between, for instance, Europe and Latin America and the Far East, and between Canada and south-east Asia. That’s what we do, and therefore our model has a proof of concept, particularly at this point in the cycle.”

During the judging period, HSBC’s bankers were instrumental in ground-breaking deals spanning every region and asset class. It was joint bookrunner on Schaeffler‘s €895.6m private placement and initial public offering, which pioneered a US-style listing process in Europe by replacing research reports with analysts who could engage directly with investors. The bank has been a key player in the internationalisation of the renminbi and Argentina’s recent return to the international capital markets.

HSBC’s role in the stabilisation of Greece’s bank sector is worthy of note. It was coordinator and structuring adviser for Alpha Bank and Eurobank in the first securitisation-based restructuring platform to manage Greek non-performing loans (NPLs). It also orchestrated Eurobank’s non-pre-emptive share capital increase, which was oversubscribed despite the difficult market backdrop. 

Credentials such as this put HSBC in good stead for the structured finance and bank balance sheet management deal flow expected over the coming year. “Getting some of these securitisations away, to enable management of NPLs should not be underestimated. Eurobank’s $2bn equity issue was done in difficult markets and it reflects how we have developed and done things differently – we haven’t been afraid to support clients with large transactions in stressed market conditions,” says Mr Phillips.

Chinese outbound activity, particularly into western Europe, is another trend that HSBC is well positioned to capitalise on. It has a strong presence in both regions and a recent track record that includes the $20bn financing of ChemChina’s takeover of Syngenta. And the UK’s decision to leave the EU could catalyse more deal flow. “Appetite to deal with the UK has not lessened. It is actually seen by some as a greater opportunity over the medium-term. So we should not be surprised to see more outbound Asia activity, particularly from China,” says Mr Phillips.

Most innovative investment bank from central and eastern Europe

Winner: Sberbank

At first glance, what is most striking about Sberbank is its scale. With 7500 clients and the full suite of transaction and advisory expertise, it stands at the centre of central and eastern Europe’s investment banking landscape. But dig beneath the surface, and what really defines Sberbank is its strong focus on client relationships.

“What we are seeking to do is deliver a top-tier service, which is why clients select us and not because Sberbank may put an order into book on the back of its strong balance sheet. Our focus is on the quality of service, professionalism and trying to be helpful to the client, trying to support them,” says Anton Malkov, the bank’s head of capital markets. “We are not scared to tell a client not to rush and do a deal at a later stage when the backdrop is more favourable.”

A number of Sberbank’s deals over the past 12 months have helped improve the market outlook, particularly for debt capital markets. In July 2015 it was joint lead manager on Russia’s first inflation-linked bond, a Rbs75bn ($1.15bn) issuance by the country’s ministry of finance. Five months later it played the same role on mining firm Evraz’s $750m Eurobond, the first by a speculative-grade Russian issuer since sanctions were imposed on the country in 2014. This was followed by a number of domestic and international bonds, a number of which Sberbank orchestrated. “Now there is a good pipeline for the remainder of the year and we are looking forward to what comes next on the back of this successful wave,” says Mr Malkov.

In mergers and acquisitions, Sberbank has led on some of central and eastern Europe’s highest profile deals. For Oscar Ratsin, head of merchant banking, 'the standout is the leveraged buyout of 95% of Prime Shipping Group from international shipping company Pietro Barbaro. This is a landmark transaction in the Russian market that aims to provide an investment platform to build the largest domestic shipping business.  

Going forward the bank is not pursuing any change of strategy, but it is focused on introducing digital technology. It is already laid the foundations of this, launching a multi-asset electronic trading system called Sberbank Markets, and a remote banking platform for financial institutions called FinLine.

Most innovative investment bank from Latin America

Winner: Bradesco BBI

While it is difficult to overstate the problems facing Brazil’s economy and government, the country’s banking system is, all things considered, faring rather well. The country’s biggest lenders have sound balance sheets which makes them well positioned to help Brazil out if its slump. Over the past 12 months Bradesco BBI has done its part, creating new financial instruments and leading some of the region’s most transformative transactions.

According to Leandro Miranda, Bradesco BBI’s head of investment banking, it is a culture of innovation and leadership, combined with constantly seeking the best transactions for clients, that gives Bradesco the edge over its competitors. “To be the leader, you have to create markets and products. To do that, you must understand your marketplace, macroeconomics and what is going on in the broader world, and your clients’ business plan,” he says. “Then, you are in a position to create tailor-made solutions to reduce clients’ financial costs, boost their growth and optimise their capital structure. If the best solution is not in the market yet, we create it.” 

That is exactly what Bradesco did for mining conglomerate Vale, creating a new type of tax-exempt infrastructure debentures that would appeal to retail investors. This allowed Vale to raise 1.3bn reais ($389m) from more than 5000 individual investors, and Bradesco to continue its dominance of this type of financing. “We were the first bank to move into this world of tax-exempt instruments. In the first semester, our market share was larger than the other eight banks active in this space combined, as we were the first mover,” says Mr Miranda. 

In another compelling deal, Bradesco acted as sole lead manager on 1bn reais of collateralised debt obligations, known as CRAs, for processed food company BRF. The highly tailored structure allowed BRF to raise debt in the local capital markets for the first time, and at a lower cost than it could have done internationally.     

Looking ahead, Mr Miranda expects growing demand for Latin American, and in particular Brazilian, bonds given international investors are looking for yield, and liquidity has started flowing back into emerging market funds. He also forecasts more mergers and acquisitions. “In the coming years I expect significant consolidation in Latin America, but particularly in Brazil. If the market isn’t growing, and you can’t grow organically, this is a way to create synergies and reduce costs,” he says.

Most innovative investment bank from Asia-Pacific

Winner: CIMB 

The breadth and sheer number of CIMB’s transformative, cross-border deals sees the Malaysia-headquartered bank take home the Asia-Pacific award for 2016. Despite being smaller than many of its regional competitors, CIMB played a role in some of the year’s most complex merger and acquisition (M&A) deals, equity issuances and debt capital market transactions. 

CIMB’s achievements are made all the more impressive by the difficult market backdrop it has been operating in. “It has been a tough year in view of the sluggish economic environment and volatile conditions, which saw numerous corporates and institutions treading cautiously where their investment decisions were concerned,” says Mak Lye Mun, CEO of group wholesale banking at CIMB Group. The weakening of emerging market currencies, however, created M&A opportunities for buyers and sellers. 

CIMB was principal adviser to Axiata Group Berhad in its RM5.91bn ($1.43bn) acquisition of an 80% stake in Nepal’s biggest mobile operator, Ncell, which closed in April 2016. One month later it completed water and infrastructure company Taliworks’s $54.6m sale of its Chinese assets, quickly followed by its RM245m acquisition of a 35% stake in listed waste management company SWM Environment Holdings.

In capital markets CIMB recently became Malaysia’s first bank to issue Basel III-compliant additional Tier 1 securities, and brought to market the first bonds issued out of Thailand to benefit from the Credit Guarantee and Investment Facility (established by the Association of South-east Asian Nations and the Asian Development Bank). 

However, CIMB’s finest work is arguably in Islamic finance. It was sole lead manager on the first programme to be approved under Malaysia’s new ‘sustainable and responsible investment sukuk’ framework, a deal that also included first-time sukuk investors. In April, CIMB was lead manager and bookrunner on the Malaysian government’s $1.5bn wakala, which was the first sovereign sukuk to be backed purely by non-physical assets. In addition, CIMB worked on Asia’s biggest greenfield Islamic-compliant project bond financing and helped the Hong Kong government to issue its second ever sukuk.

The bank’s leadership team deserves significant recognition, but Mr Mak is keen to share the credit. “The award is truly a silver lining in a challenging year and I dedicate the achievement to all our clients, who have stood by us and our bankers for their astute advisory and timely execution of these deals,” he says.

Most innovative investment bank from the Middle East

Winner: National Bank of Abu Dhabi

National Bank of Abu Dhabi’s (NBAD’s) strong local presence and commitment to the Middle East gives it an edge over its bigger international rivals. “Our strategy emphasises our regional dominance through which we seek also to be internationally relevant. Our Middle Eastern footprint is central to our value proposition and is a key differentiator for us,” says Andy Cairns, the bank’s global head of debt origination and distribution.

This has made NBAD a key player in Middle Eastern bond and loan markets. Its sales team is the region’s biggest, which gives it access to top-tier investors, but also the second- and third-tier buyers which, combined, are an important source of liquidity. This has made NBAD an important conduit for foreign issuers looking to sell into the region.

“We’ve invested heavily in our infrastructure and are the only bank with a dedicated bond syndicate desk in the Middle East,” says Mr Cairns. “We have origination, structuring and transaction management know-how on the ground, the region’s largest salesforce and we’re the region’s biggest secondary market liquidity provider in fixed income.” 

Islamic finance is a cornerstone business for the bank. “Sukuk is synonymous with the Middle East and the majority of sukuk issuers and investors are from the region,” says Mr Cairns. In September 2015, NBAD executed the first amortising sukuk for a supranational and in March 2016 it was sole manager on the first private placement in sukuk format for a Gulf Co-operation Council financial institution. Over the following months it privately placed sukuk for a number of other issuers, providing them with an alternative source of liquidity during a period of market volatility.

NBAD has a shariah board and a dedicated Islamic structuring team. It has been at the forefront of opening the shariah finance market to non-traditional issuers, and has taken the lead in replicating conventional structures in sukuk format. 

In the conventional space, recent highlights include the first-ever conventional bond out of the emirate of Sharjah (a $500m issuance by the Bank of Sharjah) and its own $750m additional Tier 1 perpetual bond issued in June 2015. NBAD’s bond achieved the lowest ever coupon for a dollar-denominated Tier 1 offering from an emerging markets financial institution. 

Most innovative investment bank from Africa

Winner: Rand Merchant Bank

In a region undergoing a huge amount of transformation, Rand Merchant Bank (RMB) is a much-needed source of stability in Africa. With deal experience in more than 35 countries in the continent and a full suite of investment banking services, RMB has established itself as a trusted adviser to local and foreign clients. 

At a time when many banks are reviewing their game plan, RMB remains committed its historic strategy. “Our brand promise – ‘Traditional values. Innovative ideas’ – has remained unchanged for 30 years because we believe it still encapsulates what distinguishes RMB from its peers,” says the bank’s CEO, James Formby. “We don’t claim to have a monopoly on talent but we do believe that our culture sets us apart as it empowers smart people to collaborate and architect unique, multi-disciplinary solutions for our clients – no matter how complex their requirements.”

An example of this is South Africa-based Mediclinic’s £1.4bn ($2.2bn) reverse takeover of Abu Dhabi-based Al Noor. RMB was joint financial adviser to Mediclinic, a deal Mr Formby describes as one of the boldest, most complex and exciting in which RMB has ever been involved. RMB was also instrumental in the same company’s acquisition of a 29.9% stake in the UK’s Spire Healthcare, a deal partially funded by South Africa’s first exchangeable bond. 

Other debt capital market standouts include the International Finance Corporation’s R1bn ($70m) green bond, the first to be issued in South Africa by a multilateral, and the African Export-Import Bank’s (Afrexim) $750m Eurobond, its biggest to date. For the Afrexim deal, RMB also provided bridge financing to cover a cash flow gap between the maturity of its existing debt and the issue of this new bond. 

 Mr Formby is also keen to highlight RMB’s role in transactions that aid Africa’s broader development goals. “We are proud of the deals that have an impact on service delivery in the markets in which we operate, for example the provision of a comprehensive funding solution for a managed equipment service contract between General Electric [GE] and the Kenyan ministry of health that will see GE supply, install and maintain healthcare equipment to 98 hospitals across Kenya,” he says. This supports Kenya’s Vision 2030, the government plan to become a middle-income country with a high quality of life.

RMB was also a key player in the Azura-EDO independent power project (IPP), Nigeria’s first true IPP, which adds 450 megawatts to the country’s future power supply.

Most innovative investment bank for bonds

Winner: HSBC 

HSBC takes home the Most Innovative Investment Bank for Bonds award for the second year in a row after a 12-month period in which it pioneered deal structures and led on transformative transactions across a range of geographies. 

“HSBC has pushed the boundaries of the debt capital markets over the past year, delivering numerous innovative solutions for our clients globally,” says Alexi Chan, HSBC’s global co-head of debt capital markets. “We continue to spearhead key market developments, including renminbi internationalisation, capital issuance by financial institutions and green bonds. These new markets and structures are increasingly important as clients look to broaden their financing options across regions and currencies.”

The bond house’s recent track record certainly supports Mr Chan’s comments. HSBC has been instrumental in taking advantage of the liberalisation of China’s capital markets, and in December was joint lead underwriter of Korea’s onshore Rmb3bn ($449m) three-year issuance – the first panda bond by a sovereign. HSBC has been structuring adviser or lead bookrunner on inaugural additional Tier 1 (AT1) transactions for a range of banks including ABN Amro, China’s Bank of Communications and Erste Bank, which was also the first AT1 out of Austria. Meanwhile in the green space HSBC was joint lead manager on the City of Paris’s €300m 15-year climate bond, the first launched by a French local authority, and a $500m five-year green bond by Sweden’s SEK – the first from a European export credit agency.

HSBC’s emerging market expertise is apparent the world over, but its leading hand in Argentina’s recent return to international capital markets after 15 years of financial exile is worth highlighting. During the judging period the bank originated two deals from the province of Buenos Aires (totalling $2.25bn), the city of Buenos Aires, and energy company YPF. It also had a role in the federal government’s landmark $16.5bn bond, which was four times oversubscribed.  

Indeed, the bank has been at the forefront of all the key market themes. “We helped global issuers to navigate through the volatility and low rate environment, reopening markets and leading some of most distinctive deals of the period, across both developed and emerging markets,” says Jean-Marc Mercier, global co-head of debt capital markets at HSBC. Notable deals include the state of Qatar’s $9bn three-tranche issuance, the Walgreens Boots Alliance $6bn five-part bond, which helped fund its merger with Rite Aid, and SMFG’s €1.5bn 10-year deal, which was the first euro-denominated Japanese holdco bond in euros.

Most innovative investment bank for climate change and sustainability 

Winner: BNP Paribas

It has been a pivotal 12 months for sustainability the world over. At the UN’s Paris climate conference (COP21) in December 2015 leaders of 195 countries adopted the first global climate deal, which binds them to keep global warming less than two degrees Celsius above pre-industrial levels. Many banks quickly announced their commitment to help reach this ambitious target, including BNP Paribas.   

“At last year’s COP21 conference, we decided to double our financing to renewable energy by 2020,” says Virginie Pelletier, head of sustainable finance, corporate and investment banking at BNP Paribas. The French bank has long been a proponent of sustainability, but over the past year it has taken that to a whole new level. “As well as direct lending, we’ve rolled out more green capital markets products and launched a reporting tool integrating ESG [environmental, social and governance] criteria for investors,” says Ms Pelletier. “We’ve made excellent progress in developing services that support clients in integrating sustainability through their value chain, and will continue to expand our sustainability programme.” 

The bank has a dedicated sustainable capital markets team and its recent green bond credentials are unrivalled. In May 2016 it was joint lead manager on Turkiye Sinai Kalkinma Bankasi’s $300m green bond, the first out of Turkey, which will help fund private sector investments tackling greenhouse gas emissions. Two months prior it was joint arranger of the first green schuldschein, a €550m deal by German wind turbine producer Nordex. 

It has also continued its pioneering work with multilaterals. In November 2015, BNP Paribas helped the European Investment Bank (EIB) launch a new sustainable investment solution that allows French institutional investors to align their financial objectives with their energy transition goals. Known as Tera Neva, it consists of a €500m equity index-linked bond, issued by the EIB in its climate awareness bond format, which dedicates proceeds to renewable energy and energy efficiency projects. Last year the bank continued to help the World Bank with its sustainable development bond issuances. Of particular note is a $165m sustainable development bond that supports member country efforts to end poverty and inequality across all sectors.  

BNP Paribas has also recently expanded its suite of indices based on ethical and sustainability criteria. One of these, the Ethical Europe Climate Care Index which is sponsored by Solactive, features large-cap European companies based on both their carbon footprint and energy transition strategy.

Most innovative investment bank for equity derivatives

Winner: Natixis

In a business dominated by the biggest French banks, a new player has entered the fray. Natixis is shaking up the equity derivatives space with a suite of out-of-the-box products targeting different market segments. 

Eric Le Brusq, the managing director and global head of equity derivatives at Natixis, attributes the division’s success to its innovative and collaborative approach. “The core engine of Natixis’s equity derivatives is the financial engineering team’s idea-generating capabilities that have added significant value to client products,” he says. “By harmonising the financial engineering and sales teams based on geographical area or client type, Natixis has been able to better serve clients by offering added-value solutions in the current market context.” 

In March 2016, the French investment bank helped insurer Swiss Life AM launch a smart beta, Solvency II-compliant fund that selects stocks based on a risk premia approach and consume 60% less capital than a pure equity portfolio.

Last year, Natixis launched the Clewe index to offer a local market alternative to the Euro Stoxx 50. Consisting of the 60 biggest companies in France’s equity markets, it creates a new way for private banks, retail banks and institutional investors to gain local exposure. Euronext has licensed Natixis to create structured products from Clewe and since the first trade in August 2015 there have been €1.8bn in nominal trades. As an underlying, it has taken a significant share of the market away from Euro Stoxx 50. “These successes ensure that we remain committed to offering both innovative solutions and client-centric services that differentiate from our competitors,” says Mr Le Brusq. 

Over the past 12 months, Natixis has integrated more sustainability factors into its family of indices. It recently launched the NXS Climate Optimum Prospective indices, which take a holistic approach of what needs to be addressed when it comes to integrating climate into investment strategies, rather than filtering companies based solely on carbon emissions.

As economic and political uncertainties, combined with market volatility, place pressure on investors to find attractive yield, Natixis’s forward-thinking strategy puts its equity derivatives business in a strong position. In addition to enhancing regulatory solutions under Solvency II and Basel III, and developing its expertise in climate indices and green bonds, Mr Le Brusq notes the division is expanding its coverage in niche markets such as fund solutions and proprietary indices.

Most innovative investment bank for equity-linked products

Winner: Société Générale

A few years ago, European fund managers warned that the lack of new convertible bonds put the market at risk. A flurry of issuance by European corporates in 2013 eased their concerns, and the market-opening deals seen during 2015 and 2016 should put their fears to bed. 

Société Générale Corporate & Investment Banking (SG CIB) played a key role in these landmark deals which has clinched the bank the Equity-linked Products award for 2016. Perhaps the most notable is Airbus’s debut €500m seven-year convertible bond, on which SG CIB was sole global coordinator and joint bookrunner

“The Airbus deal printed at exceptional terms [negative yield, 62.5% premium] and was the key catalyst of what became the biggest trend in the Europe, Middle East and Africa market. Convertible bonds from very large companies across sectors, whether in a dilutive or non-dilutive format, gained strong momentum offering a competitive funding solution while broadening the issuer base,” says Bruno Magnouat, head of equity-linked products at Société Générale. The first super-blue-chip company to issue equity-linked notes, Airbus kick-started a string of similar deals by similarly large borrowers including IAG, France’s Veolia Environnement and technology group Safran. It is a timely trend for investors, which are searching for yield against the backdrop of record-low interest rates.   

Another highlight was steelmaker Severstal’s $200m equity-linked bond in April, the first out of Russia in three-and-a-half years. In addition to reopening the market, Mr Magnouat notes the very low coupon of 0.5%. “SG CIB’s market read was bold and spot on,” he says. It also revealed investor appetite for Russian exposure despite ongoing sanctions, which helped pave the way for more of the country’s corporates to tap international bond markets in the following months.

Earlier this year SG CIB also spearheaded the revival of the non-dilutive convertible bond, a synthetic structure the bank created in 2014. It was joint bookrunner on engineering company Technip’s €375m five-year notes, which combined the issue of non-dilutive cash-settled convertible bonds with the purchase of cash-settled call options.

Most innovative investment bank for foreign exchange

Winner: BNP Paribas

After battling through a few tough years, the past 12 months provided a number of bright spots for the foreign exchange (FX) industry. The Bank of International Settlements’ triennial FX survey shows that volumes have only slightly dipped since 2013 and that the market is becoming more diverse with regards to currencies and trading hubs. 

While regulatory requirements have forced some banks to rethink their FX activities, BNP Paribas remains committed to servicing clients’ needs in this increasingly global market. “We continue to operate in all major trading hubs and have onshore presence in 29 countries offering sales, trading, strategy, structuring, prime brokerage and electronic execution expertise to our clients,” says Adrian Boehler, the bank’s global co-head of FX. “At a time when some of our competition are rethinking their commitment to the business, our global footprint remains a core part of our strategic value proposition to our franchise, ensuring that we stay relevant as a strategic partner in both developing markets as well as G10 markets.”

This made BNP well positioned to respond to the Chinese central bank’s unexpected decision to devalue the yuan by 3% over two days in August 2015. BNP Paribas’s inventory meant it could accommodate significant client demand for options at good prices, despite a general shortage of market liquidity.

Over the past 12 months, the bank has launched its pre-trade analysis tool, known as ‘Insight’. This completes its transaction cost analysis (TCA) platform, which supports clients throughout the full trade life-cycle, up to and including post-trade portfolio analysis. This focus on transparency is consistent with BNP Paribas’s Cortex iX, its FX spot algorithm execution service. By limiting itself to three execution algorithms, Cortex iX is a simpler proposition to what has been seen in the market in the past. It also facilitates transparent reporting and a complete audit trail, which bodes well in the changing regulatory landscape.

“We will continue to grow our algorithmic execution and transaction cost analysis capabilities in response to that evolution, which plays to the strengths of our quantitative DNA,” says Hubert de Lambilly, global co-head of FX at BNP Paribas. “It is this quantitative DNA that has continued to underpin our leading position in FX derivatives.”

Most innovative investment bank for infrastructure and project finance

Winner: Citi

With post-crisis capital requirements hitting banks’ long-term lending, and the global infrastructure gap estimated to be more than $3000bn a year, infrastructure and project finance expertise is more prized than ever before. Over the past 12 months, Citi has proven its ability to structure without a blueprint, execute against a backdrop of market volatility and depressed commodity prices, and get first-time, non-traditional investors on board to help fund deals. 

“Citi’s expertise in infrastructure and project finance lies in our unique ability to harness multiple creditor and investor markets alongside traditional lending and first-time transactions,” says Nasser Malik, the bank’s head of global structured debt. Citi’s work throughout the Americas is of particular note, including on some landmark airport transactions. 

In May, Citi was bookrunning senior manager on a $2.41bn bond to help fund the expansion of LaGuardia airport in New York. The financing was structured to minimise near-term amortisation to help the issuer match cashflow with servicing obligations, and is the country’s biggest public-private partnership (PPP) to date. Given that PPPs have struggled to take off in the US as they have elsewhere, it sets an important precedent. 

Meanwhile, in Panama, Citi developed a new credit structure for a $575m 144A/Reg S bond issuance to fund the expansion of Tocumen Airport. This increased the airport’s debt capacity and expanded the investor base for Latin American infrastructure projects. In October, the bank closed a $3bn revolving credit facility to finance the first stage of the new Mexico City airport. It utilised an innovative collateral structure, by which fees collected by airlines will be used to repay the loan. Construction risk is also mitigated as repayment can be serviced by tariffs collected from the existing airport. 

In June, Citi was global coordinator and bookrunner on the $1.15m bond to fund Lima Metro Line 2, the public transport system that will transform Peru’s capital. Other deals saw the bank structure bonds in non-US currencies to better match cashflows on foreign assets, while distributing the debt to US investors. Via swapped notes (executed at investor level) in euros, sterling and Canadian dollars, Citi has expanded the projects’ credit capacities by creating access to a broader range of infrastructure investors.  

“Citi’s business is well positioned to continue our leadership in this dynamic sector as it expands to even more geographies, issuers and investors,” says Mr Malik.

Most innovative investment bank for IPOs and equity raising

Winner: Citi

It is in tricky markets that the best equity houses usually come to the fore. That is exactly what Citi has done over the past 12 months, finding pockets of liquidity despite the volatility to serve clients in a way not all banks can. 

Reflecting on the year to June 2016, John Chirico, Citi’s co-head of capital markets origination for the Americas, says the bank is proud of its continued leadership in initial public offerings (IPOs). “While equity capital markets volumes slowed, Citi has continued to dominate the IPO market, delivering insightful advice and innovative strategies and structures for our clients – including carve outs, sponsor monetisations and special purpose acquisition companies [SPACs],” he says.

Citi played a pioneering role in the development of SPACs and continues to advance the market by creating structures that deliver the best outcome for both issuers and investors. For example, in September 2015 it structured the first SPAC by a top-tier private equity firm – TPG. By improving the quality of sponsors bringing these deals to market, a broader range of investors are drawn to the product.  

Between complex real-estate investment trusts and strategic private investments in public equity, Citi’s capabilities span the full spectrum of equity products. But its IPO work is what really stands out. It led one of 2015’s best-received IPOs in Blue Buffalo ($779m), for which Citi developed, articulated and marketed a new premium category to create maximum value from the company’s circa 50% top line growth. In April 2016, Citi helped Bats list on its own exchange; the deal reopened the US IPO market and succeeded despite the exchange operator’s failed listing attempt in 2012. 

In October, Citi led on First Data’s IPO, which raised $2.6bn to become the largest such offering in 2015. This was at the height of market volatility, a time when many other deals were withdrawn. It was also a joint bookrunner on the $12bn simultaneous triple listing of Japan Post Holdings, Japan Post Bank and Japan Post Insurance. Meanwhile, in October the bank was joint global coordinator and joint bookrunner on Schaeffler’s IPO, which pioneered a US-style listing process in Europe by replacing research reports with analysts making themselves available to speak with investors.

“Citi has built a strong backlog of IPOs in 2016, and we expect to maintain our leadership position as the IPO window reopens,” says Mr Chirico.

Most innovative investment bank for Islamic finance

Winner: MCB Bank

The internationalisation of Islamic finance has received much attention in recent years. A growing number of non-Muslim majority countries are issuing sukuk and other shariah-compliant instruments to tap into an alternative – and vast – source of liquidity. But this should not overshadow the progress being made in markets historically associated with Islamic countries.

Pakistan is a case in point. The country consistently improves its position in the Islamic Finance Country Index, an annual report prepared by UK-based consultant Edbiz Consulting which ranks markets based on the state of their Islamic banking and finance industries and leadership in the global market. Over the past four years, Pakistan’s score has increased by 50%. 

One of the firms pushing this is MCB Bank. “Building on our strong network, brand name and market credibility, we are striving to achieve new heights in the banking sector of Pakistan,” says president and CEO Imran Maqbool. It has recently taken the decision to merge its branches into a newly created subsidiary dedicated to Islamic finance. During the judging period, two of the bank’s deals standout as particular highlights.

Last December MCB was adviser and mandated lead arranger on a Rs3.76bn ($35.31m) syndicated term finance facility in diminishing musharakah format. The funds will be used to modernise the Lahore-Islamabad Motorway under a 20-year build-operate-transfer concession awarded to the project sponsor. As the borrower does not own the underlying land, the loan is secured by toll revenue and detachable assets. It is a rare example of a Pakistan project financing where security is based primarily on the bankability of the concession agreement and toll collections. Flexibility was built into the repayment timeline, to account for fluctuations in the collection of tolls throughout the loan’s 10-year tenor. The structure and documentation is expected to be replicated in future infrastructure financings where land cannot be used as security.

Also last year, MCB Bank helped devise a complicated $50m funding arrangement for Pakistan’s biggest mobile phone provider, which allows the company to generate funds in a completely shariah-compliant manner. At the centre of the arrangement is a syndicated Islamic finance facility backed by intangible services such as talk-time minutes and internet service hours. 

These transactions reveal the bank’s ability to innovate debt products to deal with challenges presented by clients’ business models, and which have the potential to become industry standards. 

Most innovative investment bank for leveraged finance

Winner: Credit Suisse

The second half of 2015 was a tough time for US leveraged finance. Against the backdrop of choppy markets, deals were pulled and some banks were left holding stakes they could not sell in the aftermarket. This had a knock-on effect in Europe, but the market proved resilient following the UK’s unexpected decision to leave the EU. Today, the outlook is brighter on both sides of the Atlantic, with private equity firms looking to deploy the capital they have raised in recent years. 

Credit Suisse is one of the best placed to benefit. A leader in leveraged finance in the US and Europe, the bank has navigated markets over the past 12 months like no other, and had a leading role in the year’s benchmark and unprecedented transactions. 

David Miller, Credit Suisse’s co-head of credit, highlights the $49.5bn funding of Dell’s purchase of EMC as a deal that demonstrates the bank’s ability to structure and execute large and complex transactions. Arranged in October, the bank was global financing coordinator on the financing which accessed the term loan, high-yield and investment grade bond markets across a range of tenors.

Mathew Cestar, Credit Suisse’s co-head of global credit products in Europe, the Middle East and Africa, notes that the strength of Credit Suisse’s global franchise enables it to provide clients around the world with market access that best meets their requirements at any particular point in time. A good example is the €1.34bn loan and €525m high-yield bond it executed in July 2015 to help fund the buyout of glass-maker Verallia, followed one year later by a €1.6bn term loan re-pricing and new capital raise in volatile markets. Mr Cestar notes that this provided Apollo, Verallia’s US private equity owner, with access to European investors in a deal that included the largest term loan ever sold in Europe.

In terms of debut borrowers, Credit Suisse was joint global coordinator on the €1.6bn financing backing of the buyout of Dutch fleet management company LeasePlan by a consortium of investors. It was upsized during the roadshow due to strong demand.

Credit Suisse’s long-standing success in the leveraged finance business reflects the bank’s ability to provide value-added solutions to both issuer and investor clients. “We work closely with those clients to deliver the solutions that best serve their needs. Issuers choose us to lead large and complex transactions because of our deep market intelligence and the breadth of our distribution platform,” says Mr Miller.

Most innovative investment bank for mergers and acquisitions

Winner: UBS

It is an exciting time for global mergers and acquisitions (M&A). In 2015, some $4.8bn of deals were announced, the highest volumes on record, and mega-deals made a comeback. During the judging period, UBS has acted as financial adviser on some of the largest transactions globally, including Syngenta’s $43bn sale to ChemChina and Deutsche Börse’s merger with the London Stock Exchange.

But where UBS has truly made its mark is in tailored solutions that help unlock value and address particular challenges. “We are delighted to win the award because it recognises the strengths of our franchise and the progress we have made executing on our strategy, which is based on intellectual capital and not on our balance sheet,” says Piero Novelli, the bank’s global head of advisory.

Judges were impressed by UBS’s display of genuine and scalable innovation. Two examples stand out. First is the A$12.2bn ($9.12bn) takeover of Australia-listed infrastructure company Asciano. Following many competing proposals over a nine-month period, UBS acted as financial adviser on the joint purchase by two previously competing consortia. The acquisition structure involved the break up of the target’s port and rail businesses, with ownership distributed among Qube and seven infrastructure funds. 

Second is the landmark Thames Tideway Tunnel project. As financial adviser to Thames Water Utility, UBS used an M&A-style bidding process to maximise competitive tension in public procurement competitions. It is expected to change the way large procurement processes are run in the UK infrastructure sector.

Another UBS theme is regional precedents. It was financial adviser on the $21bn merger of Vodafone Netherlands with Liberty Global’s Dutch operator Ziggo, which received anti-trust clearance in August 2016. It is the first time in Europe that a pure cable operator and mobile operator have merged to create a national unified communications provider.

Meanwhile, in Asia UBS was the sole financial advisor to China Cosco and Cosco Pacific on its RMB120bn ($17.98bn) asset restructuring with China Shipping. Conducted via multiple transactions, it is only the second merger of Chinese state-owned enterprises and provides a valuable blueprint for how to do so without flouting government policies.

Going forward, UBS is focused on the growing deal flow out of Asia-Pacific and into Europe, the Middle East and Africa. “UBS is in the best position to take advantage of this trend as a result of our unique and market-leading China platform,” says Mr Novelli.

Most innovative investment bank for private placements

Winner: Barclays

Historically a US product, private placements have gained significant momentum in Europe in recent years. Its inclusion within the EU’s capital markets union and trade association efforts to standardise documentation suggest the market will continue to mature. Banks such as Barclays, which are strong on both sides of the Atlantic, are also helping to drive the market’s globalisation. 

During the 12 months to June 2016, the Barclays private capital markets team raised $6.7bn in private debt for 34 issuers across a wide variety of jurisdictions, industries and structures. In addition to its US/UK focus, Barclays’ long-standing client relationships give it an edge over competitors. “Our close investor dialogue allows us to obtain live feedback on potential new transaction features and types that we can offer to issuers, whether it is new structures, currencies or longer delayed drawdowns,” says Angus Whelchel, the bank’s head of private capital markets.

Barclays has opened up the private placement market to the UK education sector, raising £470m ($610m) for nine colleges, schools and universities since June 2015. That involved educating a range of investors about the asset class, which has expanded the investor base for future deals. 

In the utility space, Barclays helped Austrian electricity provider Tiroler Wasserkraft raise €110m in a deal that included US investors. With a 20-year tenor, it is one of the longest dated euro tranches to be printed in the US private placement market in recent years. It also closed and funded on the same day (a rarity for private placements) and required Barclays to devise a way to overcome the issuer’s inability to sign swap indemnity provisions, as typically required by US investors.  

In another US highlight, Barclays was financial adviser and lead placement agent on an $827m placement of 20-year notes that refinanced a major Florida highway. A unitranche structure minimised the coupon and the deal is the US’s first broadly marketed infrastructure refinancing.

Barclays is focused on pushing the market forward, by expanding into new industries and geographies. “We have had great success in doing more transactions for real estate and financial institution group issuers and across multiple jurisdictions while continuing to increase our presence in the education sector,” says Mr Whelchel. “We will continue to capitalise on that momentum while leveraging our dedicated team of private placement professionals to increase market share going forward.”

Most innovative investment bank for restructuring

Winner: Houlihan Lokey

As a restructuring house, Houlihan Lokey has earned a formidable reputation. It consistently tops bankruptcy and restructuring league tables, and its business is relatively evenly split between debtor and creditor mandates. This balanced deal experience means it can strategise more effectively than most of its competitors. 

Its financial restructuring group is the world’s biggest and is present in 19 offices in the US, Europe and Asia. Its recent work is testament to this global footprint.  

Last December, the firm helped Spanish gaming group Codere gain UK court approval to reorganise €1.2bn of senior secured notes via a scheme of arrangement (SOA). The restructure was completed in April 2016, marking the end of a long-running affair that involved a family-owned group, a founding CEO, hedge funds and a judge initially hesitant to approve the SOA.

In Asia, the bank was instrumental in the restructure of PT Berlian Laju Tanker, a shipping company dual-listed in Indonesia and Singapore. It was a truly global deal. After months of negotiations, the company approved the debt-for-equity swap proposed by the banks – Houlihan’s clients – which was implemented by 27 SOAs in Singapore, a foreclosure process under New York law and the enforcement of account control agreements. 

In 2015 it advised the Daughters of Charity Health System (DCHS), a struggling California-based not-for-profit organisation, on a change of control, recapitalisation and capital infusion by asset manager BlueMountain. The unique structure devised by Houlihan Lokey has put DCHS on much safer financial footing while allowing it to continue as a not-for-profit, tax-exempt healthcare provider.

In light of plummeting oil price, in 2014 Houlihan formed a group of restructuring professionals dedicated to the oil and gas sectors. That foresight certainly paid off. “Houlihan Lokey was the pre-eminent adviser on essentially every major oil and gas sector restructuring transaction, with 23 transactions completed or ongoing during the 12-month period ending June 2016,” says Joe Swanson, senior managing director in the bank’s financial restructuring group.

It is decisions such as this that demonstrate Houlihan Lokey’s commitment to staying ahead of the game. “We focus on the entire debt market for potential defaults, with particular emphasis and dedication on sectors expected to experience a heightened level of distress,” says Mr Swanson. 

Most innovative bank for risk management

Winner: Société Générale

In a year characterised by record-low interest rates, unexpected currency moves and volatile commodity prices, risk management solutions have been in high demand. More than any other bank, Société Générale Corporate and Investment Banking (SG CIB) has risen to the challenge. Its holistic approach to risk management has seen it provide cutting-edge solutions for corporates, financial institutions and governments encompassing rates, foreign exchange and other exposures.

“Over recent years we have developed a more and more integrated advisory-based approach, working in close partnership with our clients in finding the most appropriate solution for their needs, taking into account their specific internal policy, accounting and regulatory constraints,” says Albert Loo, SG CIB’s global head of sales, rates, credit and currencies, and co-head of institutional sales.

The bank’s cross-asset strategy is reflected in some of its recent highlights. In the lead up to the UK’s referendum on EU membership, SG CIB executed more than €1bn of Brexit-contingent options, taking advantage of the negative correlation between the euro-dollar currency pair and European equity markets to keep the hedges as cheap as possible for clients. 

At the end of 2015, SG CIB created a tailor-made credit guarantee that allowed the Cameroon government, with the backing of the African Development Bank, to tap the international bond markets for the first time. Earlier in the year the bank made innovative use of financial guarantees to help Senegal’s government enter a $500m cross-currency swap to hedge its dollar-denominated bond back into euros. With no credit default swap market for this category of issuer, SG CIB was crucial in finding a way for the government to hedge its foreign exchange exposures. 

Deals such as these display the bank’s ability to cater for a broad range of clients and exposures. “Whether it is intrinsic risks associated with mergers and acquisitions or asset disposal-type deals for corporate clients, or risks stemming from new regulation in a zero rates environment for large financial institutions, our integrated platform enables us to draw from a vast pool of products,” says Mr Loo. “Combined with our extensive cross-asset structuring expertise and know-how, [this] makes for a powerful engine that finds often new and innovative ways of addressing what often seem complex challenges.”

Most innovative investment bank for securitisation

Winner: Credit Suisse

For the past few years, Credit Suisse has been at the vanguard of US securitisation, and despite its ongoing reorganisation, the business has not lost any steam. “Amid the bank’s strategic restructuring, Credit Suisse has continued to defend its position at the top of the securitisation league tables, maintaining its dominance in key asset classes while introducing new issuers to the marketplace,” says Jay Kim, the bank’s global head of asset finance. 

It was the ‘go to’ bank for benchmark transactions, such as the £1.6bn ($2.12bn) financing of Cerberus’s acquisition of CHL and its mortgage assets, otherwise known as Project Lansdowne. This consisted of a £525m UK residential mortgage-backed securitisation and a £1.16bn private warehouse facility syndicated to five lenders. Yet Credit Suisse’s securitisation expertise is just as evident in the huge number of firsts and tricky structures it has executed over the past 12 months.

In October 2015, it was the structuring agent and joint bookrunner on a vehicle lease financing for BMW which priced within guidance levels despite the Volkswagen emissions scandal breaking just weeks earlier. For US government-sponsored mortgage provider Freddie Mac it devised a unique senior-sub structure whereby Freddie Mac guarantees payment on the senior certificates but not the subordinated ones. The deal, which was well received by investors, creates a new way of transferring risk to the market while reducing funding costs.   

Other market-opening deals include the first securitisation of solar loans (for SolarCity), the first securitisation of unsecured consumer loans for a new type of online lender (Avant) and the first rated railcar securitisation since 2000 (Napier Park). Credit Suisse was sole structuring agent on a $300m deal for AIG subsidiary United Guaranty which, for the first time, applies the credit risk transfer approach adapted by Freddie Mac to the insurance market. 

By applying asset-backed technology in new sectors and maintaining strong client relationships, while ensuring the efficient use of capital and balance sheet, Credit Suisse has managed to stay ahead of the game. “We have been adapting the business to the post-crisis regulatory world and will continue to fine-tune it as the environment evolves further,” says Jon-Claude Zucconi, head of consumer and commercial finance at Credit Suisse. “This has already meant finding new and innovative ways to partner with our buy- and sell-side clients which has resulted in deeper and more diverse relationships across our enhanced client base.”

Most innovative investment bank for structured investment products

Winner: Société Générale

Derivatives are at the heart of Société Générale Corporate and Investment Banking (SG CIB), and over the past 12 months it has expanded its range of structured product solutions and made changes to improve the overall client experience. SG CIB has added new services to its online client portal SG Markets and strengthened its cross-asset structure by bringing together its flow and structured engineering teams. 

“Clients are facing unprecedented complexity, which creates the need for a partner that is able to understand and translate their challenges into solutions. Our fully integrated platform enables us to adapt to and anticipate the needs of our clients,” says Marc Saffon, SG CIB’s global head of engineering. “Transfer of know-how from one asset class to another is just one way of finding new and innovative solutions.” 

One example sees the bank export equity-type structures to the fixed-income space. By applying an equity reverse convertible to products that use interest rates as the underlying, investors can make the most of record-low rates but receive a pay-off structure they are familiar with.

SG CIB has been at the forefront of European bond repacks, adding callability features to enhance yield. These products have proved popular among insurers, which are searching for ways to generate enough return to meet their member obligations. Going a step further, last year SG CIB designed a new product for French insurer CNP Assurances, and now many distributors have similar deals in the pipeline.

Earlier in 2016, SG CIB created a highly customised, fixed-income product for Italian investors. Italian investors are looking for top-rated, non-bank issuers to avoid exposure to Europe’s new bail-in rules. SG CIB responded by designing a dollar-denominated, callable seven-year note with a structured, step-up coupon issued by the European Investment Bank. This gave it access to an AAA rated issuer but with yield pick-up, and was bought by all of Italy’s major distributors.  

SG CIB has also seen success further east. It recently created the first lightly structured Formosa bonds sold to retail and listed on Taiwan’s Taipei Exchange. In South Korea it led on the first structured Arirang bond (a won-denominated bond issued by a foreign entity), the pay-off for which relies on the spread between long-term and short-term US interest rates. 

Most innovative investment bank for syndicated loans

Winner: Bank of America Merrill Lynch

A market leader in structuring and syndicating bridge loans, term loans and revolving credit facilities, Bank of America Merrill Lynch’s (BAML’s) ability to advise and execute in dislocated markets has set it apart from competitors.

“In more volatile markets [such as those] we were in during the back half of 2015 and into 2016, we play a form of advisory role relating to the balance sheet and loan products with regard to capital commitments, which in the case of that time period really demonstrated our focus on clients and the strength of our global platform to execute on the front and back ends,” says AJ Murphy, BAML’s head of global capital markets.

A number of clients had planned to transform their business over this period, which required bank commitments during a time of considerable volatility. BAML’s response was to think holistically about what the client wanted to accomplish, how to structure the loan and the potential interplay of it within the broader equity and debt capital markets. “Despite the challenging market environment, we worked within our risk framework to commit capital and then successfully advised the clients on where to find demand and how to most efficiently access quickly evolving markets,” says Ms Murphy. 

It is strategies such as this that see BAML appear on the year’s benchmark deals – most notably the financing of brewery Anheuser-Busch InBev’s acquisition of SABMiller. The bank was lead financing arranger of the $75bn in committed senior credit facilities ($35bn of which were term loans) used to fund the cash portion of the offer. It is the biggest committed financing package and largest term loan package to date.

BAML’s client commitment is exemplified by its work for Abbott Laboratories. Early this year it was sole arranger and bookrunner on a $9bn bridge facility to support the company’s proposed acquisition of Alere. Two months later the bank was sole underwriter of Abbott’s $17.2bn bridge facility to help acquire St Jude Medical. This is the first time in the investment-grade market that two bridge facilities have existed side by side.

Meanwhile in Europe, BAML led the documentation and syndication of €2.5bn of loans and facilities for Ferrari’s new Dutch holding company. Consisting of three tranches, it required bespoke structuring to allow Ferrari to complete its separation from its former parent Fiat Chrysler Automobiles.

Most innovative investment bank for consumer and retail goods

Winner: Rothschild

Rothschild’s capabilities and track record in the consumer space are second to none, and this is reflected in the numbers. Taking mergers and acquisitions (M&A) as an example, during the judging period the firm increased its share of the sector’s M&A activity from 11.9% to 17.8%. But it is the complexity of these deals that earns Rothschild this award. 

Highlights include its advice to PAI Partners on its portfolio company R&R Ice Cream’s acquisition of Nestlé South Africa’s ice-cream division, one of the most ambitious partnerships between private equity and a corporate to-date. Rothschild also helped Pep Boys with its $1.2bn sale to Icahn Enterprises, which endured an intense bidding war involving Bridgestone; and Telepizza on its €215m debt refinancing which set a Spanish precedent for pre-initial public offering funding. 

But for Akeel Sachak, global head of consumer at Rothschild Global Advisory, the €23.1bn merger of Europe’s three Coca-Cola bottlers is the group’s standout deal of late. “Undoubtedly this is the transaction I am most proud of over the past 12 months,” he says. “It involved every kind of complexity you can imagine in terms of being a three-way merger with each of the three entities coming from radically different cultural and ownership backgrounds, an inversion from the US with its attendant flow-back challenges, the creation of a major brand new listed entity in Amsterdam, and a new governance structure that needed to work for three very different kinds of shareholders.” 

Rothschild’s success is testament to its understanding of, and commitment to, local markets. It has about 200 consumer bankers around the world including in all the major business centres. “With 52 offices we can serve our clients effectively on the ground everywhere from Santiago in Chile to Ho Chi Minh City in Vietnam, and I think that is an increasingly important and differentiating feature of our franchise, versus those of our competitors, many of whom still operate out of a much narrower geographic footprint,” says Mr Sachak. 

The consumer and retail space being characterised by a disproportionate number of family controlled businesses also works to Rothschild’s advantage. “Because we are family controlled with more than 200 years of history, a lot of these companies and their owners feel a degree of affinity with us which they don’t necessarily feel with some of our competitors,” says Mr Sachak. That means better access to midcap clients, which translates to bankers with more deal experience than those focused purely on the biggest transactions.

Most innovative investment bank for emerging markets

Winner: HSBC

As many emerging markets struggle in the wake of political scandals and low commodity prices, those in Asia have fallen into favour thanks to structural reforms, strong currencies and the beginning of new earnings cycles. With its historic ties to the region, it is no surprise to see HSBC acting as a key player in helping these economies reach their potential. 

The bank is at the forefront of the renminbi’s internationalisation; during the judging period it became the first foreign commercial bank to issue panda bonds and helped South Korea issue the first sovereign panda bond. Under the umbrella of BMW’s Bavarian Sky asset-backed securities (ABS) platform, HSBC became the first foreign bank to underwrite a Chinese auto ABS and introduced a number of structural innovations that will act as a precedent for future deals and bring local practices into line with international standards. Another standout was the Malaysian government’s $1.5bn two-tranche sukuk, the world’s first to utilise 100% nonphysical underlying assets.

But HSBC’s Asia credentials extend far beyond debt and securitisation. “We’ve made big strides with our emerging markets merger and acquisition franchise, particularly those with a cross-border element. We’re lead adviser to ChemChina on its landmark acquisition of Syngenta, and we’ve worked on a number of deals that have seen European retailers disposing of local operations in Asia,” says Borja Azpilicueta, HSBC’s co-head of advisory for Europe, the Middle East and Africa. “The China outbound story remains a key theme, and we’re well-placed to capture opportunities there.” 

Another notable mandate for HSBC was Tesco’s sale of its South Korean business Homeplus to a consortium led by MBK Partners. With a price tag in excess of $5bn, it is Asia’s biggest ever private equity-led deal.

Moving west, HSBC helped the Romanian government sell its first dual-tranche note, which at $2bn was also the biggest bond out of the country to date. Its Middle East mandates also deserve recognition. “We were instrumental on Qatar Airways’ acquisitions of stakes in IAG and Latam, demonstrating our strong emerging markets cross-border capabilities in Europe, the Middle East and the Americas,” says Mr Azpilicueta. Indeed, among its most transformative deals is the new Mexico City airport. Its first stage of financing utilises an innovative collateral structure by which fees collected by airlines will be used to repay the loan. 

In short, HSBC is regarded as having an enviable emerging market franchise across geographies and asset classes capable of creating bespoke solutions for its clients.

Most innovative investment bank for financial institutions group

Winner: Credit Suisse

Against a backdrop of regulatory tightening and political scrutiny, financial services firms are in need of bulletproof advice, clever structuring and slick execution. In recent years, Credit Suisse has emerged as a leader in helping banks comply with the new regulatory landscape, but its work over the past 12 months for the full spectrum of financial firms puts it head and shoulders above its competitors. 

In May it created a new type of pre-funded tier 2 note, known as ‘P-caps’, for Swiss Re, which provides the insurer with a contingent source of liquidity to help meet its regulatory requirements. The $800m is replicable and Credit Suisse has already helped Prudential Financial issue similar notes. Earlier in the year it helped Crédit Agricole with its $3bn liability management exercise, the first to target French residential mortgage legislative covered bonds.

In addition to financings, Credit Suisse’s financial institutions group (FIG) has helped reshape the global FIG landscape through complex and transformational mergers and acquisitions (M&A). “In the insurance sector we saw an increase in defence assignments against activist shareholders and hostile buyers, cross-border M&A and reinsurance consolidation,” says Alejandro Przygoda, head of the bank’s global FIG. “We played a lead advisory role on highly complex cross-border transactions, including Tokio Marine’s acquisition of HCC Insurance and Partner Re’s sale to Exor, the largest hostile insurance transaction in the past 10 years.” 

The bank was instrumental in six of General Electric’s nine divestitures intended to shed its regulatory status as a systemically important financial institution, and the last leg of Piraeus Bank’s recapitalisation, which was crucial to filling the Greek financial sector’s capital hole revealed by 2015’s stress tests.

While Credit Suisse’s most impressive FIG work has been in Europe and the US, its capabilities extend into Asia. A good example of its ability to create bespoke solutions is its role as sole structuring agent on Hong Kong Aviation Capital’s $725m warehouse facility, the first by an Asia-based lessor to be widely syndicated.

“Going forward, we will continue to focus on supporting our clients through the evolving regulatory environment and volatile markets,” says Mr Przygoda. The bank certainly built the foundations of that earlier this year, acting as joint global coordinator for Dutch fleet management company LeasePlan in its €1.6bn senior secured notes offering that reopened the high-yield market in Europe after the market volatility in February.

Most innovative investment bank in natural resources and commodities

Winner: HSBC 

Never before have mining and petroleum companies, along with project sponsors, needed trusted advisers and innovative financing solutions so badly. The significant dislocation in commodity prices and the global push towards renewables has prompted many to reassess their business models. Record-low interest rates makes funding cheap, but many banks have withdrawn from project finance as part of their broader exit from capital-intensive industries. Against this backdrop of upheaval, HSBC has risen to the challenge.  

“While commodity markets have remained challenging over the past year, HSBC continues to execute successfully our strategy for our natural resources clients,” says Adam Brett, the bank’s global head of natural resources. In July 2015, the bank was the sole financial adviser to Kuwait Petroleum International on the sale of its Europoort refinery to global commodities trader Gunvor. HSBC was also instrumental in finding a financially solid and reliable buyer that would continue the refinery operations. Meanwhile, in October 2015 the bank was joint bookrunner on BHP Billiton’s landmark $6.5bn debut hybrid bond. The following month it performed the same role on struggling platinum company Lonmin’s $407m rescue rights issue while also providing $370m of bank facilities. In terms of transformative deals, one highlight is its work for Western Hydrocarbon Funding. Its brownfield expansion of onshore and offshore drilling projects in the Niger Delta will help deliver incremental crude and gas volumes in Nigeria.

HSBC’s truly global franchise gives it unrivalled insight into the markets where natural resources and commodities companies are most active, and the ability to deliver fully integrated solutions for companies operating across multiple borders. Its client base, as a result, is second to none. Chevron, Asian Americas Gas, Noble Group, YPF and Sinopec Group have all trusted HSBC with important deals over the past 12 months.

“For these global businesses we are focused on the seamless delivery of our market-leading product capabilities, our truly global footprint and our balance sheet to provide the services these clients require,” says Mr Brett. “We believe that by supporting our clients in this way during the current period of uncertainty, HSBC will be better connected and positioned to support them in the future, whatever that may hold.” 

Most innovative investment bank for sovereigns, supranationals and agencies 

Winner: Citi 

Perhaps the most notable thing about Citi’s activity for sovereigns, supranationals and agencies (SSA) over the past 12 months is the sheer variety of its ground-breaking work. While some banks advised on many notable sovereign Eurobonds and others have done a disproportionate amount of work for development banks on impact-oriented deals, Citi has excelled in a broad range of asset classes across the full spectrum of clients. 

This is something that Julie Monaco, who heads the bank’s public sector group, is keen to highlight. “Citi’s global platform and breadth of products gives our public sector group an unparalleled ability to cover global and local SSAs,” she says. “Citi has developed a unique, globally coordinated and focused public sector coverage model to identify and develop innovative solutions for addressing the most challenging problems facing governments today.”

In the Middle East, Citi worked on Abu Dhabi’s first government bond in seven years and Oman’s first sovereign bond in 20 years. It closed a $3bn revolving credit facility to help fund the first stage of Mexico City’s new international airport – a vitally important infrastructure project for the country. The bank has also established itself as a leading provider of oil hedging for sovereigns – of particular importance given its price volatility in recent years – and during the judging period it provided solutions to Mexico as an oil exporter as well as Jamaica as an oil importer.

Citi has been a key player in one of 2016’s major SSA stories – Argentina’s return to the global capital markets. In March – one month before the national government’s landmark issuance – the bank led the Province of Buenos Aires in pricing $1.25bn of senior unsecured notes due in 2024. It is deals such as this that reveal Citi’s willingness to break new ground for SSA clients.

“Over a decade of consistent public sector-focused coverage is paying off across all product areas,” says Jay Collins, vice-chairman of corporate and investment banking at Citi. He highlights the bank’s success in export credit agency finance with Turkish Exim, its project and infrastructure finance work on the Lima Metro, and the privatisation of Slovak Telekom. “Add to that our bookrunner role on more than 50 sovereign debt deals…and expanding relationships with clients from Ecuador to Romania and Spain to the Philippines, where we have invested heavily,” he says.