What a difference a year makes. When The Banker's Investment Banking Awards were held last year, Lehman Brothers had just imploded, markets were closed and banks were more focused on survival than on performance or creativity.

Twelve months on, risk appetite is returning and some markets are normalising. While loans are at a 10-year low, corporate debt markets are at an all-time high, and global high-yield bonds have tripled in value in the year to date. Announced mergers and acquisitions were at a six-year low in the third quarter but deals are being done. In the US and Asia, initial public offering markets are open.

As always, the entries reflect the very best of investment banking. But they also highlight the creativity and diligence that make the financial industry a key component of economic growth. Not only have banks worked to put themselves back on the road to recovery, but have also provided the kind of tailored solutions and execution capabilities that support their clients.

The Banker awards focus on the kind of innovations that provide tangible benefits for their client base and for markets. Our judges placed greater emphasis on innovations that generated cost savings and risk management solutions for clients, and genuine value-creation for investors. We were impressed with the number of products and services that brought clarity, transparency and stability to financial markets. These showcase the tremendous value that this industry can bring to the table.

AWARDS

- Most innovative global investment bank

- Most innovative team

- Best innovation

- Most innovative boutique

- Most innovative mid-market investment bank

Most innovative investment bank from:

- North America

- Latin America

- Asia

- Western Europe

- Middle East

- Africa

- Central and eastern Europe

Most innovative investment bank for:

- Bank capital

- Bonds

- Asset and liability management

- Corporate restructuring

- Securities restructuring

- Risk management

- Sovereign advisory

- Equity linked

- IPOs

- M&A

- Equity derivatives

- Interest rate derivatives

- Inflation products

- Climate change

- Commodities

- Retail structured products

- Structured finance

- Loans

- Islamic finance

- Infrastructure and project finance

- Prime brokerage

- FX

The Judges

Philip Alexander, finance editor of The Banker.

Andrew Baker, CEO, The Alternative Investment Management Association.

Charlie Berman, co-founder of brokerage firm Amias Berman. Previously, co-head of fixed income markets, Europe, at Citi.

Charlie Corbett, economics editor of The Banker.

Gazi Ercel former Turkish central bank governor, who now runs his own consultancy, Ercel Advisory.

Tonko Gast, founding partner of Dynamic Credit Partners, and advisor to the Dutch government on the restructuring of ING.

Tom Hardy, previously head of project and structured trade finance at Royal Bank of Scotland.

Geraldine Lambe, investment banking and capital markets editor of The Banker.

Mario da Graca Machungo, former prime minister of Mozambique, now president of Millennium bim.

Roel Theissen, adviser on banking supervision and a senior lecturer at the Erasmus University in Rotterdam.

Julio A Torres, formerly head of sovereign debt management for Colombia, who now runs his own financial advisory boutique.

Patrick van der Vansem, formerly of JPMorgan and Goldman Sachs, now head of Netherlands-based sovereign advisory, Capitad.

Paulo Vieira da Cunha, former deputy governor of the Brazilian central bank, now of Tandem Global Partners.

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Lloyd Blankfein, CEO, Goldman Sachs

Most innovative investment bank

Winner: Goldman Sachs

Shortlisted: Credit Suisse and JPMorgan

Choosing the world's best investment bank during perhaps the most challenging period ever faced by the financial industry is a significant challenge. The winner of The Banker's Investment Bank of the Year has demonstrated the power of its franchise. It may have been forced to seek refuge in the arms of the Federal Reserve by changing into a bank holding company, but it has come through this crisis in better shape than most.

When Goldman Sachs last received this award in 2006, the world was a very different place. The bull market was in full steam, and principal investment and proprietary trading were a growing part of the business model. Back then the debate was all about whether an investment bank's primary function was to advise clients, be a trading powerhouse, a prime broker, a private equity investor, an underwriter or a fancy structurer; many would argue that the crisis has proved this debate to be prescient. In 2006, Goldman Sachs demonstrated that it could turn a delicate balancing act comprising a little of each of those elements into an art form. Now, it has proved that its business model also works well in a crisis.

Consistency and teamwork

CEO Lloyd Blankfein says the bank's strategy is unchanged, and that Goldman's consistency and teamwork have enabled the firm to outperform its peers through the best and worst of markets. "We've long said that we see our role as being an adviser, a market maker, a financier, a co-investor with our clients and an asset manager. We always believed, even in the most challenging days of the last year, that our clients would still want the services we offer when conditions returned to something that more nearly resembled normal."

Twelve months ago, the industry felt as if the financial world had changed for ever, yet risk appetite is now returning and some markets have seen tremendous activity over the past few months. Some are asking if there will be any real changes at the heart of investment banking. The immediate "and most important change" for the industry has been the drop in leverage, says Mr Blankfein, but the needs of corporations and investors remain the same and that is something that regulators, policy makers and banks must address.

In a recent speech, Mr Blankfein admitted that the financial industry let the growth and complexity in new instruments outstrip their economic and social utility, as well as banks' operational capacity to manage them. He says Goldman is helping to shape the new regulatory environment that must follow. "We are working closely with everyone involved in regulatory debate in the hope that we can help produce proposals which lead to more robust markets and better oversight," he says.

Importance of innovation

Innovation - the focus for The Banker's awards - has become a pejorative term during the financial crisis, yet it is the most important quality in driving economic growth. Mr Blankfein says that we must be careful not throw out the good with the bad.

"Innovation may have been overdone in certain parts of the financial system during the recent period. But we shouldn't forget that innovation also means things like helping to introduce unknown but fast-growing companies from China and Brazil to Western investors; it means providing best-in-class investing expertise to institutions and individuals; and it means tailoring products that enable ordinary businesses to raise capital and contribute to economic growth. We believe there is an important role to be played in helping make markets safer and sounder, in helping companies grow and make a positive contribution to employment and we're focusing our innovative energies on all of these."

In the worst moments of this crisis, the relationship between client and bank, and between government and the financial system, has been redrawn. Have these relationships been permanently damaged? "That's a good question. We have come through a period which has tested many assumptions and relationships," says Mr Blankfein. "That said, I believe that the financial system will emerge more robust and with better oversight; over time, that will enhance the work we do and will help in the important business of restoring confidence even further."

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Zar Amrolia, Deutsche Bank's global head of FX

Most innovative team and FX house

Winner: Deutsche Bank foreign exchange

If 2009 was a year when steady suddenly became sexy, then the foreign exchange business was a key beneficiary. The short-dated, two-way and liquid nature of the FX market allows investment banks to showcase their technology, structuring and client service capabilities without tying down too much scarce capital.

But if the market was a great opportunity for the leading bank desks, it was also fraught with risks for the companies whose hedging activities remain a major part of the business. As companies' export volumes fell and long-standing exchange rate trends reversed direction overnight, chief financial officers quickly found themselves overhedged or hedged the wrong way. Or both.

Deutsche Bank brought all these ingredients together to entrench its market-leading position. FlexFolio, launched in March 2009, allowed investors to cap their mark-to-market losses on all outstanding hedge positions with a single contract.

By consolidating hedges in this way, clients were also able to reduce the cost of hedging, which had been driven up by banks raising option premiums to cover their own fears about counterparty credit risk on FX transactions following the Lehman Brothers collapse.

Zar Amrolia, Deutsche Bank's global head of FX, says these "second, or even third-order" risks such as credit, operational and legal risks suddenly outweighed the first-order exchange rate risks that are traditionally the focus of FX transactions.

"The key for us in 2009 has been making sure that, for ourselves and our clients, we get a better framework for mitigating those risks. FlexFolio was a product designed for this," he says. And it suited a broad sweep of Deutsche's client base, including companies, insurers and other banks worried about their own mark-to-market losses or counterparty risk on contracts with their clients.

On the technology side, Deutsche Bank has also been forging ahead, with a steady stream of enhancements to its autobahn electronic FX platform, both in terms of back-end post-trade processing capabilities and front-end analytical tools for clients. The development takes in both sophisticated execution techniques, and also expanding plain vanilla electronic liquidity into new currencies.

At the sophisticated end, the autobahn FX Algo function added in the past year allows clients to monitor the size and pricing of every small order used to execute a large trade that has been broken down to avoid moving the market excessively. The client can step in at any point if the pricing begins to move outside their target range.

In terms of geography, Mr Amrolia emphasises the bank's core belief that the emerging market growth story - and its implications for currency markets - has many years to run. "Strategically, we are investing in the emerging markets in terms of headcount and resources, and bringing some of the technology developed in the G10 space into the emerging market space," he says.

In the foreign exchange category, two other banks with global footprints, Citi and HSBC, took the runners-up slots. CitiFX Velocity helped the bank to expand high-velocity trading, already present in the equity business, into FX. HSBC's dual currency flexi-forward in Chinese yuan and Hong Kong dollars enabled exporters on the mainland and importers in the special administrative region to use HSBC's market-leading Asian presence to reduce their cost of currency purchases.

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Paul Calello, CEO Investment Banking of Credit Suisse

Special Award: Best Innovation of the Year

Winner: Credit Suisse: The Partner Asset Facility

When Credit Suisse hived off $5bn of bad assets into a portfolio with the intention of awarding slices to staff as part of their compensation, it was applauded as a smart way to provide a bonus for shareholders as well as a bonus for employees. The shareholders benefit from a deleveraging of the bank without fire-sale markdowns, while employees got at least the promise of a bonus with the potential of reward if the portfolio recovers.

The Partner Asset Facility (PAF) killed three birds with one stone. First, it reduced risk without forcing Credit Suisse to offload troubled assets into awful markets - in one stroke cleaning the balance sheet and reducing exposure to further valuation volatility, at the same time as preserving maximum upside for the firm's stakeholders.

Second, it raised capital for the bank. Third, it enabled the bank to address the short-term thinking that had originated the troubled assets in the first place while creating bonuses for employees. This was seen as particularly important for those members of staff not associated with the toxic assets, who still needed to be compensated appropriately.

The Banker team thought the PAF such a fiendishly clever and, more importantly, appropriate idea, that we created this award especially for it.

The team responsible for coming up with the idea and the structure was the specially commissioned Strategic Transactions Group - a multi-disciplinary team within capital markets with expertise across tax, accounting, regulatory capital and structuring.

The challenge was, as identified by the bank, a Herculean task. Because it involved assets scattered around the globe in many different jurisdictions, setting up a fund or a company to spin them off would have been nigh-on impossible. Selling them would have generated transfer restrictions, disclosure requirements and confidentiality provisions, among numerous other obstacles.

The solution was ingenious, and used the securitisation technology held to blame for the financial crisis in the first place. The bank aggregated a pool of risky assets with a notional value of $7.6bn and a fair market value of $5bn, and synthetically sold off a first loss piece to employees in lieu of cash and restricted stock as part of their 2008 compensation.

"We developed PAF to align the long-term interests of employees, shareholders and the institution," says Paul Calello, CEO of the investment bank. "In a very difficult environment, PAF enabled Credit Suisse to compensate senior investment managers fairly, but responsibly, while further reducing risk. It is an example of Credit Suisse's commitment to managing compensation in a responsible and fair fashion, while aligning employee and shareholder value."

The PAF assets were written down to about 65 cents on the dollar, with the bet that they would be worth far more than that over the lifetime of the facility, expected to be about eight years. Some bankers were reported to be angry that they were being penalised for actions in another part of the bank, but they may feel less hard done by since reports that the plan has got off to a good start, rumoured to be up by 17% since January.

Boutique of the year

Winner: Exotix

Shortlisted: Moelis & Co

There are few investment banks that specialise in what can honestly be called frontier markets, and even fewer that can genuinely claim to have achieved much success over the past 12 months. Exotix is a boutique firm which can.

The list of countries in which Exotix operates reads more like a list of places for investors to avoid: including Yemen, Nigeria, Bosnia, Cuba and North Korea. As liquidity dried up over the past 12 months, fund managers specialising in these emerging markets were faced with falling prices and redemptions. Most found they were unable to sell bonds through their traditional investment banking relationships due to increased capital restrictions.

Exotix became one of the few investment banks prepared to price and sell emerging market and the most illiquid debt. As a result, turnover rose over 15% from June 2008 to May 2009. An impressive achievement against the backdrop of the financial crisis.

In the 10 years since its inception, Exotix has transformed itself from a basic dealer in distressed emerging market debt into a fully fledged investment bank. It has established itself as a leading player in frontier markets across the globe, and has allowed countless clients access to potentially lucrative emerging markets that were previously closed off to Western investors. More importantly it channels funds to growing companies and projects in markets where much-needed capital can be hard to come by. A number of deals over the past 12 months stood out for The Banker judges, including the small but perfectly formed $10m capital raising for New Forest Uganda, a sustainable forestry project. Similarly, the launch of the Insparo Asset Management Africa Fund impressed. Exotix put a seed investment of $140m into the fund and owns an equal one-third share alongside its own staff and a US-based seed investor. Unusually, the fund plans to invest across all asset classes, rather than specialising in just equity or debt.

Exotix is also bringing transparency to these illiquid markets. Last October it launched a website that enables clients to access bid/ask prices on more than 200 bonds and more than 50 loans.

This broker-cum-investment bank has turned its niche strategy into a profitable business. Over the past three years, it has seen impressive growth, with revenues increasing by 160% and the firm's headcount by 60%. And it is continuing to grow; it already has offices in Tokyo, London, New York and Buenos Aires and has plans to open in Accra in Ghana, Dubai and Miami.

The quality that most impresses is the boutique's willingness to go to markets from which other firms retreat. It comes up with innovative financing ideas and provides liquidity in extraordinary places. Moreover, it has been successful. In markets where many other ventures have fallen flat on their faces, Exotix has managed to build market share and increase revenues at the same time as channelling investment to where it is most needed. Not many brokers can claim to be a market maker in North Korean loans and debt. Exotix can.

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Doug McGregor, chairman and co-CEO, RBCCM

Mid-market firm of the year

Winner: RBC Capital

Shortlisted: Jefferies

If any banks have come out of the credit crunch smiling, then Royal Bank of Canada is surely one of them. Benefiting from a strong and clean balance sheet, RBC Capital Markets has grasped the opportunity to expand its business at exactly the right moment. With the bank stealing market share all over the place, investment in its international platform, including many significant hires, is now paying dividends.

The mid-market business in North America is a full industry platform, covering technology, healthcare, consumer, real estate, communications and media, and the oil and gas segments. Within Canada, the bank researches everything. Outside Canada it covers about 1100 companies in the $500m to $5bn range. The oil and gas business is supported by an oilfield services business in Edinburgh, Scotland, as well as a full research effort.

"To us, mid-market means growth," says Doug McGregor, chairman and CEO of RBCCM. "We want to do business with companies that need capital and we think our competitive advantage is that we can bring a full suite of products, equivalent to what a bulge bracket can offer in terms of the lending product. We can really bring what a boutique cannot. I think that the mid-market growth company, in terms of providing revenues to us, is often a higher potential client than an investment grade company that is often focused only on reissuing maturing debt."

In London, the bank has a rapidly growing investment banking business. So far this is largely focused on natural resources and infrastructure - and has quickly developed from being a small cap-driven business in M&A and equities to a serious player in the mid-market. "In the oil and gas space we have been the most successful advisor year-to-date on a global basis," says Tim Chapman, head of international oil and gas.

Deals to highlight include the €647m acquisition by the Dias-led consortium of Orange Nassau, where RBCCM advised the consortium, the C$219m ($204.9m) acquisition by Dana of Bow Valley. In mining too, successful deals have included financial adviser to Simmer & Jack on the $81.3m acquisition of a goldmine from Ashanti.

Royal Bank of Canada is not just focused on the mid-market - it recently advised on the C$23bn sale of Petro Canada to Suncor Energy and the C$10bn sale of Addax Petroleum to Sinopec. Its debt distribution and origination business is very active in the investment grade space, and in European sovereigns and on the gilt market, it has moved upmarket very successfully: it is currently number four in sterling and is a top tier gilt-edged market maker.

"We've been focused on filling all the gaps," says Mark Standish, president and co-CEO. "As we started to build out the firm, we avoided going head to head with dominant institutions. As we've become better entrenched, we've grown and broadened in each location and globally, the gap between that build out and our investment grade business has been narrowing. For the first time we've been able to participate in equity raisings for very large financial institutions - a good industry group for us."

The rate at which RBC is growing and up-sizing its clients, it may not qualify for the mid-market award next year.

Best Investment Bank from North America

Winner: JPMorgan

The US may have been at the heart of the financial crisis, but it is also where many of the solutions will come from. Going first into the downturn, it is also one of the first out; rolling US initial public offering volume reached $1.9bn, its highest level in five months, while corporate bonds by US issuers totalled $270.9bn so far this year - up 24% from the same period last year.

JPMorgan's role in helping clients to steer a way through the crisis and into the recovery has been significant. The sheer weight of the bank's deal flow is impressive. According to Dealogic, it leads the US equity capital markets league table - with about 6% greater market share than its nearest rival. It also tops several segments of the US debt markets and is third or thereabouts for US mergers and acquisitions.

The Banker's awards do not focus on league table positions, instead we seek out creative thinking and clever, appropriate solutions to client challenges. JPMorgan has not disappointed here.

One of the most difficult challenges was raising capital during unprecedented market conditions. In the equity-linked and FIG spaces, for example, JPMorgan has played a dominant role, providing clients with a unique array of tools to overcome the markets' limited opportunities. In coming up with tailor-made solutions in equity and hybrid products, and in convertible bonds; for liability management and in the government-backed sector, the bank re-opened markets and set standards for other banks to follow.

For the North American investment bank the most important events last year were the acquisitions of Bear Stearns and UBS's commodities business in Calgary, Canada. These both helped to materially improve JPMorgan's North American footprint and propel the bank's commodity platform into an entirely new league.

"I'm most proud of our continued focus on our clients," says Steve Black, co-CEO of JPMorgan's investment bank. "Being in a position of relative strength going into the credit crisis, we have been able to step up for clients when they needed it most. We re-opened the high-yield bond market, provided billions of dollars to state and local governments, raised billions of dollars for banking institutions, and led financing transactions for corporate clients when capital was scarce."

Despite these impressive results, the outlook for the next half of the year remains uncertain. There is still potential for further declines in US housing prices and an increase in the unemployment rate. Further disruption in the credit or mortgage markets or a significant decline in overall liquidity levels could increase the uncertainty of investment banking trading results. With JPMorgan's greater market share comes greater exposure. Hopefully the bank will remain as sure-footed in the next year as it has been in this.

Best Investment Bank from Latin America

Winner: Itaú BBA

The past year has been a particularly significant one for Itaú BBA, not least because its parent company undertook a truly transformational merger in the middle of one of the worst markets in history.

During a challenging and volatile period for capital markets, the Brazilian investment bank managed to stay clear of the derivatives turmoil and keep leverage down to reasonable levels. The country's economy is recovering and presents the bank with a more favourable setting than many other markets. Against this background, the bank's equity, fixed-income and mergers and acquisitions (M&A) businesses have helped to consolidate Itaú's position ahead of both local and international competition.

Its M&A portfolio is impressive - and not just for the size of the transactions - but its most challenging deal was the bank's advisory role to its parent company on the merger of Itaú with rival Unibanco, creating the new Itaú Unibanco Banco Múltiplo. With Tier 1 capital of $260bn - the highest levels of Tier 1 in the Latin American region and 33rd in The Banker's Top 1000 2009 ranking - the merger gave birth to a Brazilian champion with enough financial muscle to play a decisive role across Latin America.

With a series of innovative transactions in bonds, real estate asset-backed securitisations and commercial paper issuance Itaú BBA also confirmed its leading position in the fixed-income space.

In a transaction that helped Telemar Norte Leste to fund its acquisition of Brasil Telecom, Itaú combined an international bond issuance with debenture issues in local currency. By bringing a few of the largest Brazilian private banks into the deal as 'special participants' Itau was able to offer the debenture to high-net-worth individuals instead of institutional investors - a first in the Brazilian market. The transaction proved wildly popular with target investors and secured financing for the client at a lower total cost than a traditional offering to institutional investors would have done.

On the equity side, Itaú worked on the country's biggest ever initial public offering for Brazil's largest private oil and gas company, OGX, set up in 2007. Although the company had undergone rapid expansion, it had no real operational track record by the time it began to think about floating the stock, and was just starting the preliminary viability studies of some recent acquisitions. Itaú's marketing and distribution strategy was put together to ensure that potential buyers understood the company's value proposition, and culminated in the record-breaking listing.

Other parts of the bank have also worked on some pioneering deals. Its project finance team, then under the Unibanco name, advised on the first prison to be constructed and operated through a public-private partnership (PPP) scheme, in a regional area that is particularly affected by overcrowding in detention houses. As with all PPPs, the project's aims are to provide a good service with low costs. However, this particular project aims at providing a much better service to the community by introducing medical and psychological assistance to inmates, which is unusual in local prisons, as a way of social reintegration.

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Hiromi Yamaji, CEO of global investment banking, Nomura

Best investment bank from Asia

Winner: Nomura

Shortlisted: CIMB

The acquisition of Lehman's EMEA and Asia businesses has already been transformational for Nomura's Asia platform. According to data from Bloomberg, Nomura is now the number one bond underwriter in Asia-Pacific, with an 8.6% market share. According to Dealogic, it is second overall for equity capital markets, and 14th if Japan is excluded. Internationally, its headcount has doubled.

According to Hiromi Yamaji, CEO of global investment banking, the bank is definitely still in the build-out phase. "We have rolled out the bulk of our new product and service offering, but we still have new additions being added every month. Many clients are highly appreciative of this new and broader service offering, and as we move up the ranks and the client tiering systems, we're expecting to increase our market share substantially," he says.

Mr Yamaji is very positive about the outlook for the next 12 months in Asia. Even though the region was hit hard because of its high dependence on exports, he believes that policy responses have been robust and co-ordinated, and that they should also be more effective than in the West, helping to power a domestic demand-led recovery.

"Virtually all of Asia's fiscal stimulus is going to reviving the economies, rather than being used to fix financial sectors, and monetary policy easing is pushing less on a string in Asia. And unlike most advanced economies, Asia still has significant fiscal firepower at its disposal. Asia does not need to raise taxes, tighten regulations or deleverage as much as the West," says Mr Yamaji.

Asia presents amazing growth opportunities for the newly merged firm, says Mr Yamaji. The strong macro situation in the region, plus the structural growth of equity and debt markets, are the ideal tailwind for an Asia-based investment bank such as Nomura. Hong Kong and Singapore will continue to be the bank's main hubs, but there are plans to strengthen its local markets presence in China, India, south-east Asia, South Korea and Australia.

"Looking at a few specific markets, we expect China's economy to grow by 8.5% this year and 10.5% in 2010. This is led by massive fiscal stimulus, which has led to a surge in investment, but consumption is also strong," he says. "South Korea is healing relatively fast; medium-term prospects in Taiwan are brightening because of strengthening cross-strait economic ties; and Hong Kong is being flooded with liquidity. South-east Asia, India, Indonesia and Vietnam are in recovery mode, and we are turning more positive on the Philippines."

In terms of which business lines will see most growth, Mr Yamaji says that there are opportunities right across the investment bank, but, specifically, the firm has identified flow products as key to the franchise, and believes that there will be a return in the solutions business, albeit with more transparent offerings than previously. "We will be active on both ends of the spectrum - a strong flow and liquidity player, as well as a provider of tailored and appropriate solutions," says Mr Yamaji.

With the markets heating up again quickly, assembling and continuously motivating the right team is the most critical element of every investment bank's success in Asia. Mr Yamaji adds: "We believe we have the advantage of momentum on our side."

Best investment bank from Western Europe

Winner: Credit Suisse

Shortlisted: BNP Paribas and Barclays Capital

Tough times call for tough, resolute solutions and Credit Suisse's prompt and sustained reduction of risk and a focus on traditional client businesses proved it. The bank has emerged from the crisis in a remarkable position of strength. While many of its rivals are still struggling to surface from last year's mayhem, Credit Suisse has reported earnings that went well beyond analysts' expectations.

"We have aggressively cut risk over the past 18 months while focusing on our client-facing businesses, which are now showing dividends in increased marketshare and return on equity," says Paul Calello, chief executive of Credit Suisse's investment bank. "In what has been a difficult past 12 months for everyone in investment banking, we took decisive actions early enough to position ourselves well in the new environment."

The aggressive risk reduction strategy has certainly paid off. Thanks to responsible management and innovative solutions, Credit Suisse has successfully dealt with outstanding legacy positions while chasing, and obtaining, higher market share in key businesses, increased profitability and executing landmark transactions in many of its areas of expertise, from bond structuring to asset and liability management to prime brokerage.

A prime example of the bank's innovative capability has resulted in a solution that reduced Credit Suisse's risk profile by selling certain risky assets to employees that were involved in their origination as part of their compensation. The Partner Asset Facility plan raised capital and reduced risk for the bank and created a fair bonus solution for employees.

Capital efficiency has also been a key objective. Disciplined allocation of risk and capital usage across the business lines together with cost control have played an important part in the bank's success and have helped to secure a healthy return to shareholders.

"In December 2008, we announced the acceleration of our capital-efficient, client-oriented strategy," says Mr Calello. "We have seen the benefits in the first half of this year. Our focus on our client-facing businesses and on aggressive risk reduction has resulted in market share gains and increased return on equity."

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Alicja Kornasiewicz, CEO, UniCredit in Poland

Best investment bank from Central and Eastern Europe

Winner: UniCredit

Shortlisted: Raiffeisen International

There is growing evidence that 2009 was a breakthrough year for UniCredit's investment banking activities in central and eastern Europe (CEE). The top headline grabbers were its first ever mandates for CEE sovereign Eurobond issues - by Slovenia and Croatia, the latter returning to the market for the first time since 2004.

UniCredit's 'global-local' model has appealed to prominent issuers in the region, by combining access to international capital with the demonstrated loyalty of the bank's commitment on the ground.

But below the benchmark bonds, UniCredit could also be found on the ticket for a wide range of innovative deals that reached into all the key themes for the region. These include a massive $3.2bn financing for Russia's state oil giant Rosneft, backed by commodity off-take contracts; the first Bulgarian leva equity-linked issue, a convertible for Chimimport that led to repeat business just 10 months later with another innovation, the first mandatory convertible; and the first project finance deal for a Turkish mine development.

Of course, UniCredit has inherited the pedigree of CAIB's investment banking business in the region, and with it Alicja Kornasiewicz, the bank's Polish CEO who has become UniCredit's head of markets and investment banking for emerging Europe (excluding Russia and Turkey).

"Certainly the pioneering spirit behind CAIB's legacy can go a long way towards explaining this phenomenon, as too can the best-in-class competencies that came with UniCredit," says Ms Kornasiewicz.

"Today innovation is less about developing new flavours of derivatives and more about decreasing reaction times to take advantage of brief windows of opportunity and squeezing as much flexibility out of seemingly standard products for the benefit of our clients," she adds. This focus on speed and flexibility was epitomised by an April capital-raising for Polish biotech firm Bioton that involved a non-documented share and warrant offering, enabling the issuer to avoid a two-month approval process.

Ms Kornasiewicz clearly intends to maintain the momentum in the coming year, making use of UniCredit's comparatively strong balance sheet and enhanced reputation as a bank that has maintained its presence in a tough time for the CEE region's economies.

"Even though all banks need to be more selective today, our healthy capital base and improving ratios allow us to be the most active provider of financing in the more fiscally disciplined CEE markets. This would give us a clear advantage for expanding the franchise even in the best of times but is of treble importance in a credit-constrained world," she says.

Our runner-up, Raiffeisen, maintains its market-leading position for retail structured products distributed in or using underlyings from the CEE region. Its Russian investment banking team also caught the eye by advising on two of the rare successes in rouble bond restructuring, for Siberian Airlines and automotive firm GAZ.

Best Investment Bank from The Middle East

Winner: NBK Capital

The past 12 months have not been an easy time for Middle Eastern banks, particularly for those in the Gulf Co-operation Council (GCC). As the price of oil slumped so the GCC economies declined. Property bubbles across the region burst, most notably in the United Arab Emirates, and banks were forced to write off bad loans and make provisions for further losses.

Symptomatic of the region's difficulties are the travails of the heavily indebted Saudi Arabian family companies Algosaibi and Saad Group. The industrial conglomerates are restructuring combined debt that could be worth up to $22bn, of which it has been estimated by Standard Chartered that GCC banks have a $5bn exposure.

Despite the challenges faced across the region and within the Kuwaiti financial sector, NBK Capital, the wholly owned full-service investment banking subsidiary of National Bank of Kuwait (NBK), has performed extremely well, executing an impressive list of transactions and working with a range of leading clients in Kuwait and across the entire region over the past 12 months.

One deal that particularly stood out was that for Kuwaiti conglomerate Boodai Group. NBK Capital co-advised the Boodai Group on its establishment the Sahaab Aircraft Leasing Company in December 2008. The investment bank was instrumental in raising $72m in equity for the newly formed company as well as $160m in debt. It is part of a three-phase $1.5bn capital raising process that will form one of the largest aircraft leasing companies in the region. NBK Capital executed this deal at a time of immense volatility both in debt and equity markets.

The bank has developed a flexible and diversified platform which has ensured success through both good and bad markets. It manages investment funds across the region, including a Gulf Equity Fund, a Kuwait Equity Fund and a Qatar Equity Fund.

NBK Capital has also looked to capitalise on the rapidly growing Islamic funds market, launching two sharia-compliant funds in the past six months. The most recent of these, the Islamic KD Ijari Fund II, was launched in early September. It followed the Islamic KD Ijari Fund I, which was launched in June and is already fully subscribed. The funds offer investment in a portfolio of leasing contracts that are structured according to Islamic principles. NBK Capital's managing director of asset management, Nabil Maroof, said the funds would provide reliable monthly returns and relatively low risk.

Reliable returns and low risk are two phrases that financiers are rarely able to deliver upon in these volatile times, particularly in the Middle East. Plummeting oil prices and bursting property bubbles have seen to that. However, judging by NBK Capital's record so far in managing the economic downturn, perhaps this is one bank that might just be able to live up to these promises.

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Jacko Maree, chief executive, Standard Bank

Best Investment Bank from Africa

Winner: Standard Bank

South Africa's Standard Bank is getting used to hitting the headlines. Unusually for a bank in these troubled times, it tends to be for all the right reasons. Since its sale of a 20% stake to Chinese banking giant ICBC just before the credit crisis shut down the global capital markets, the bank has been able to look beyond Africa's borders. The $5.6bn cash injection as a result of the sale beefed up Standard Bank's capital base at a time when many of the world's banks were suffering.

The investment banking division has built upon its strong presence on the African continent and continues to open new business in frontier markets that few other banks would dare to enter. Its recent application to build an office in the Angolan capital of Luanda is just one testament to the bank's pioneering spirit.

It is outside the continent, however, that Standard Bank views its next great opportunities. In an interview with The Banker in June, the bank's chief executive, Jacko Maree, explained that he is always on the lookout for the next deal. "We've always, as a bank, had to be opportunistic," he said. "We went into Brazil, for example, when it wasn't fashionable because we have got a better chance of being successful when not every other bank in the world is trying to do the same thing."

In March, the bank lived up to Mr Maree's word by purchasing a 33% stake in struggling Russian investment bank Troika Dialog. It was a bold move at a difficult time for Russia's investment markets. But with Standard Bank's long history in Russia it is a move calculated to pay long-term dividends.

Mr Maree's view is that Russia is exactly the right place for a developing markets bank to be in. "We've been looking for ways to expand our presence in Russia and we had worked with Troika Dialog on many, many deals over the years. We knew them well and things just kind of came together," said Mr Maree. "We took the view that it was better to be seen to be locally owned in Russia, rather than just a foreign bank, as we were."

Looking ahead, Standard Bank's relationship with ICBC will inevitably come under the microscope. South Africa and China are not two nations that one would traditionally associate with a close cultural fit but so far it appears that Standard Bank has been successful in working with its Chinese shareholders. It now has 20 staff in an office in Beijing and the bank reported, in last year's results, that the net profit after tax as a direct result of the relationship with ICBC was in excess of $10m.

Standard Bank is a template for how to run a successful emerging markets bank. It limits itself to vanilla investment banking products and resisted the temptation to expose itself to the complex derivative instruments that have so troubled Western peers. It has attracted the investment of one of the world's biggest banks, ICBC, and if it continues to follow its sensible regulatory and risk management policies then it will only go from strength to strength.

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David Marks, chairman of FIG capital markets, JPMorgan

Most innovative Bank Capital

Winner: JPMorgan

Shortlisted: Deutsche Bank and Royal Bank of Scotland

JPMorgan is one of the handful of global banks to emerge from this crisis in rude health, and its financial institutions group has been a key player in facilitating the recovery of the financial sector. It has provided solutions across the entire range of capital and in every geography. From equity to subordinated debt, on the asset side to liability management, and from investors to government intervention, JPMorgan has led the field.

In the most difficult markets for bank capital ever experienced, execution skills have been paramount. The strength of JPMorgan's platform was demonstrated with key equity deals, included HSBC's $19.5bn rights issue and Barclays' £7.05bn ($11.5bn) equity capital raising.

"These were momentous deals, not least because of their sheer scale," says David Marks, chairman of FIG capital markets. "Few people imagined that such deals would be executable in that size, at that point in time."

With liability management clearly re-emerging as a central theme - but investor appetite then unknown - JPMorgan managed to kick-start the market as sole dealer-manager on Standard Chartered's $1bn tender across four upper Tier 2 securities in November 2008. Subsequent liability management exercises have been led for Santander, KBC, Allied Irish and Anglo Irish Bank, Thai Military Bank, Gulf International Bank, K Bank and Cathay United Bank.

One of the bank's most interesting roles, says Mr Marks, was to assist the UK government in the successful 'Darling Plan'. The UK financial response was the first to address both liquidity and capital needs in a single solution, and broke away from the blanket guarantees of previous rescue packages, instead providing individual issuer guarantees in order to minimise the UK government's contingent liability.

"Our industry has not been through anything like this in living memory, and few of us could have expected to work on packages of such systemic importance. Personally, it has been one of the most challenging and rewarding projects that I've ever worked on," says Mr Marks.

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Paul Tregidgo, vice-chairman of debt capital markets, Credit Suisse

Most innovative in Bonds

Winner: Credit Suisse

Shortlisted: HSBC and BNP Paribas

Credit Suisse is the worthy winner of this year's Bond House of the Year award. As one judge pointed out: "The breadth and depth it has achieved in these markets has been a notable achievement."

The bank has been involved in some of the key bond deals of the year, including reopening the corporate bond market in October last year with IBM's $4bn multi-tranche issue, the restructuring of nine retail and commercial mortgage backed securities - worth $5.6bn - and the reopening of the high-yield market with a $860m deal for Fresenius, the first high-yield bond in Europe since 2007.

Paul Tregidgo, vice-chairman of debt capital markets at Credit Suisse, says the bank - which has performed well during the crisis - has succeeded by being ready to act as soon as markets showed any sign of recovery. "Twelve months ago, the story was all about survival," he says. "As the year unfolded, stability returned and investor appetite began to develop, it was crucial to have the right solutions in place and have the right execution strategy ready."

Despite the furore that was unleashed when Lehman Brothers collapsed one year ago, the bond markets have gone from near death to a bumper year, and not just for investment grade offerings. Mr Tregidgo says the bank's high-yield team believes the market is on track to have its fourth best year ever in terms of new issue volume - and the market only re-opened a few months ago. "We are seeing appetite for new issue product across the spectrum. The problem is not one of demand, it is one of supply," he says.

Support for clients has been key to the bank's success, adds Mr Tregidgo. At the height of the crisis, loyalty was at a premium and that will not be quickly forgotten. "Risk managers, funding officials and corporate treasurers will not forget the trauma of the past year as the speed of the current market recovery might intimate," he says.

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Paul Hawker, Credit Suisse

Most innovative in asset and liability management

Winner: Credit Suisse

Shortlisted: Société Générale and Goldman Sachs

Paul Hawker at Credit Suisse puts the success of his liability management team over the past year down to two factors in particular. First, the bank has a significant worldwide presence in high-yield and emerging markets, which are the key growth areas for this activity. Second, he has a well-balanced team that includes his own capital markets and derivatives background, a credit trader and an insolvency lawyer.

The mix of emerging market knowledge, credit expertise and legal skills was well demonstrated by the bank's role as arranger of the debt exchange warrants programme by the government of the Philippines in 2008. The adoption of Basel II, coinciding with the global credit crisis, put Philippines banks in a potentially difficult position as some of the largest holders of Philippines sovereign debt in dollars and euros.

The exchange warrants allow investors to switch their foreign currency bonds into local currency obligations in an event of default. As local currency assets held by the banks qualify for a milder regulatory capital treatment under Basel II, this helped preserve bank capital at a crucial time.

In less exotic markets, Credit Suisse led the way with the process of bank capital restructuring. The demand for higher-quality capital together with rapidly shrinking balance sheets has made this a crowded business. But the Rabobank like-for-like Tier 1 exchange jointly led by Credit Suisse in May 2009 was nonetheless distinctive, as it reopened the Tier 1 market that had been closed since the start of the year.

"The new money ended up being larger than the exchange offer itself. Had Rabobank come straight to the market without the exchange offer, it might have raised eyebrows. The exchange provided a huge lead order for the new money book, from investors who were already long Tier 1 Rabobank bonds, so it was the right tool to reopen the market," says Mr Hawker.

A close second went to the Société Générale, for its work on the complex process of pricing and restructuring the Fortis structured asset portfolios to enable the Belgian government's rescue package.

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Sophie Javary, co-head of European restructuring, Rothschild

Most innovative in Corporate restructuring

Winner: Rothschild

Shortlisted: Lazard and Goldman Sachs

As the world segued from financial crisis into economic slowdown, the exposure of over-leveraged and unsustainable business models has extended even to traditional, blue-chip companies. The boundaries of insolvency legislation around the world have been tested as companies, shareholders and creditors all seek the most innovative mechanisms for value-maximisation.

Rothschild has been at the forefront of restructuring innovation, in many cases setting market precedents. As one of The Banker's judges said: "Rothschild has been active in virtually every type of transaction, every sector and every geography."

In the UK, together with Freshfields, Rothschild executed the first combined scheme of arrangement and pre-pack for McCarthy & Stone - which has subsequently become a common structure. It executed one of the most complex early-stage debt amendments for Taylor Wimpey, and in France carried out the first ever pre-pack administration of a business under the 'Sauveguarde' insolvency protection system for Autodistribution.

If business has boomed for restructuring specialists, potential sources of refinancing have rarely been in shorter supply. "We have faced a unique situation," says Sophie Javary, co-head of European restructuring at Rothschild. "It has been brutal for a number of companies at the same time, with credit tightening simultaneously right across the banking system. In previous downturns, some parts of the industry remained robust; there weren't so many constrained lenders."

Andrew Merrett, co-head of European restructuring, says that Rothschild's status as a safe haven, unaffected by the financial crisis, has been key for clients, and that recent investment in a pan-European restructuring platform has enabled the firm to better co-ordinate origination efforts. "Clients have been looking for advice in the face of disarray among many of their lenders. Because of our investment in the team and the platform, we have been able to map the market and leverage the breadth of knowledge that this generated."

But if you are looking for comfort about economic recovery, do not go to Mr Merrett, for he warns that there is more to come. "The next big challenge will be the financings with maturities of 2012, 2013 and 2014. And with the impact of the expected cuts in public spending taking time to filter through, I am not a subscriber to the idea of a speedy recovery."

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Rajiv Kamilla, co-head of the portfolio solutions group, Goldman Sachs

Most innovative in Securities Restructuring

Winner: Goldman Sachs

Shortlisted: Barclays Capital

When commercial paper (CP) markets closed over in mid-2007, a string of structured investment vehicles (SIVs) worldwide that had lent long and borrowed short quickly faced insolvency. An investor base that included many money market funds, which had assumed that highly rated and short-dated CP carried few risks, also meant the creditors often had little experience of a debt restructuring process.

Rajiv Kamilla, co-head of the portfolio solutions group responsible for portfolio restructuring at Goldman Sachs in New York, says the bank moved to the front of the queue as a restructuring agent because it quickly understood and brought together the breadth of skills needed.

"When we noticed the developments in the SIV space, we combined three core areas of the firm to approach the problem - corporate restructuring, structured finance and credit market teams. It was this combined effort that led us to a unique solution for a unique problem," says Mr Kamilla.

This was vital, says Andrew Wilkinson, co-head of European restructuring, because there were certain elements to the solution that were natural decisions for a restructuring specialist, but might not have been obvious if a bank had only applied its structured finance team to the problem.

"At the heart of the transactions in Europe was moving the assets from one vehicle to a new one, through a securities enforcement and sale. And the second key was to give people some options, for as long as possible in the process - whether they wanted to take cash at market value or a note issued by the new entity," says Mr Wilkinson.

The choice proved especially significant in the first such deal, SIV Portfolio (previously backed by hedge fund Cheyne Capital), because the auction of underlying assets outperformed expectations. This prompted many investors to switch late in the day from taking pass-through notes - continued participation in the restructured vehicle - to cashing out immediately.

While most distressed SIVs worldwide have already followed Cheyne through a restructuring process - with Goldman disclosed as the adviser on at least four subsequent transactions - Mr Wilkinson says the process is far from being put into cold storage. As the downturn in the real economy bites, multi-tranche leveraged buy-out deals that enter distress pose similar challenges, in terms of inter-creditor relations and securities enforcement. He hopes the experience gained will help generate a cleaner-functioning work-out system, which could also have macroeconomic benefits in terms of restarting credit markets more rapidly.

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Fabrice Famery, head of corporate solutions, BNP Paribas

Most innovative in risk management

Winner: BNP Paribas

Shortlisted: Deutsche Bank and Credit Suisse

The financial crisis has seen risk management practices transformed. Reporting lines have been redrawn, limit systems and stress tests recalibrated. Risks that previously were monitored, now have to be proactively managed.

At no time in living memory have essential corporate needs such as refinancing, hedging and asset and liability management been more challenging, says Fabrice Famery, head of corporate solutions at BNP Paribas.

"Given the magnitude and the speed at which the crisis unfolded, the biggest challenge was to react quickly to the changing environment and propose actionable solutions in short deadlines so that our clients could implement a risk reducing strategy before the crisis made the situation worse, or take advantage of a market opportunity due to the market dislocation - like very low swap rates, or unusually high credit spread - before the situation got back to normal."

One of the features that has differentiated BNP Paribas' corporate solutions team is its creative response to market dislocation. For example, it produced a range of mark-to-market-friendly products that enabled clients to hedge any potential market-to-market losses, including a protected auto-callable par forward. In the final quarter of 2008, it developed a 'crisis management solutions toolbox' to bridge the gap between clients' objectives and market conditions by leveraging capital management and risk management technology.

"The solutions we designed ranged from managing refinancing risk to reviewing fixed to floating policy in the context of very low Libor rates. The ones which got the most traction were puttable bonds and liability management transactions," says Mr Famery.

The crisis has made his business more meaningful than ever, says Mr Famery. "Since Lehman's failure the world has changed and our activity has turned into a 'problem solving business'; we like to think that the benefits of our analysis or structured solutions are tangible and more value creative than ever."

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Matthieu Pigasse, head of the sovereign advisory group, Lazard

Most innovative in Sovereign Advisory

Winner: Lazard

Shortlisted: Rothschild and Credit Suisse

In a year when governments around the world have taken Keynesian economics to heart and pumped billions into economies, sovereign advisory practices have leapt to prominence. This business, which always has a certain quiet cachet, now also carries with it the weight of systemic rescue. You don't have to be a banker to know that business has been brisk.

As a result, there has been a rush by firms to build out their sovereign advisory teams and bulk up their platforms. According to one headhunter, this area is "hot" and sovereign bankers can charge a premium for those relationships.

Lazard has been at the forefront of this year's activity, working with governments to rescue individual banks, and on sovereign debt restructuring. Matthieu Pigasse, head of the sovereign advisory group at Lazard, says that Lazard is in a good position to fight off any new competition - advising governments is part of the history and culture of Lazard; it is in the firm's DNA, he says.

"There may have been a proliferation in banks entering the sovereign advisory space, but most of these banks are both issuers and advisers," says Mr Pigasse. "The credit crisis has reinforced the need for sovereigns to have unconflicted, creative advice, and Lazard remains unique in terms of our position and wealth of experience."

Some deals stand out. For example, Lazard advised Ecuador on the elaboration of the negotiation strategy and proposals with respect to its $3.21bn bond default. "This was the first time that a state defaulted for political rather than financial reasons, and was based on the recommendation of an audit commission's report into the country's external debt," says Mr Pigasse. "We proposed an innovative buyback via a modified Dutch auction, which ultimately enabled Ecuador to be reconciled successfully with the international lending community."

Some wonder whether the crisis has changed relationships between financial institutions and their respective governments. "[It] has shown governments that they must be more accountable for the actions of their own banks and the running of their banking systems," says Mr Pigasse. "Strong regulation is essential to ensure transparency and confidence remain in a country's financial system."

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Viswas Raghavan, head of international capital markets, JPMorgan

Most innovative in Equity linked

Winner: JPMorgan

Shortlisted: Bank of America Merrill Lynch and Goldman Sachs

From being on its knees for 12 to 18 months, the equity linked market has seen what can only be described as a miraculous turnaround. In the second half of last year, excessive volatility in the secondary markets was increasing hedge fund losses and limiting primary issuance; now interest in both sides of the product is extremely high.

"The volatility was good for the options element, but liquidity in the credit markets in the form of credit default swaps and asset-swap support was non-existent through the crisis. And a lot of convertible arbitrage funds suffered a wave of redemptions with shorting bans in place in every jurisdiction; convertible supply ground to a halt," says Viswas Raghavan, head of international capital markets at JPMorgan, winner of this year's award. "But with the credit environment now almost as benign as in the pre-Lehman era, and volatility remaining in the equity environment, we have seen a mega pick-up in equity linked volumes."

An important new trend has emerged in the post-crisis buyer universe. Technical buyers such as hedge funds have been overtaken by long only funds that are not looking to hedge, but to hold. "Hedge funds are smaller and have lost a lot of leverage, and long-only funds have emerged as important new players in the market. Often they are shareholders in the stock and are buying the equity linked product for its defensive characteristics," says Monika Weiler, head of equity linked products for Europe, Middle East and Africa.

The new appetite from traditional funds was clearly evident in Vedanta's $1.25bn convertible bond, on which JPMorgan was sole bookrunner, in June this year. "This was one of the larger deals of the year, for a BB credit in the metals and mining sector, and represented more than 10% of the company's market capitalisation. The enthusiasm from long funds for this deal is a testament to the strength of this new buyer universe," says Mr Raghavan.

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John Hyman, head of global capital markets, Morgan Stanley

Most innovative in IPOs

Winner: Morgan Stanley

Shortlisted: JPMorgan and Citi

In July 2008, the initial public offering (IPO) market just about died, and it didn't start to come back to life until February this year. With global IPO issuance totalling just $12.7bn, the first half of 2009 is the lowest first-half total since 2003.

It is telling that the most optimistic numbers came from BRIC (Brazil, Russia, India and China) countries: China Zhongwang's IPO was the first to raise more than $1bn, and the $3.7bn offering from Brazil's Visanet's, priced at the end of June, was the largest IPO of the year.

The third quarter is looking busy, however, says John Hyman, head of global capital markets at Morgan Stanley, winner of this year's IPO award. "We have seven or eight deals on the road right now and the pipeline includes deals from China, Europe, the US and India. This is as busy as we've been since 2007," he says.

When the markets were still looking pretty bleak, Morgan Stanley reopened the US IPO market with the $720m subsidiary IPO of Mead Johnson. The deal featured a dual class share structure and different voting rights that will enable the parent company to sell down the remainder of its stake for cash or dispose of the stake through a tax-free separation.

Shortly afterwards, Morgan Stanley launched the £220m ($357m) IPO of Max Property, the first real restate IPO since 2007 and the first European IPO in more than six months. The bank created a structure aimed at creating confidence, providing transparency and aligning interests.

Both were launched into difficult markets. Mead went public on a day when the Dow Jones and the Standard & Poor's exchanges closed down by almost 5%; Max Property around the time that two comparable IPOs were pulled from the market. Structural design and collaboration with investors were key to both deals, says the bank. Mead Johnson generated more than $8bn of demand, and Max Property achieved a 90% conversion ratio from marketing into firm orders.

Mr Hyman says that everything suggests that a solid rebound is happening. "The activity is mainly in the US and in Asia, with Europe emerging a bit slower, but investors are interested. They are no longer looking for big discounts and are now in the mood to take risk. They are particularly interested in companies that offer growth," he says.

Most innovative in M&A

Winner: Goldman Sachs

Shortlisted: Bank of America Merrill Lynch and Barclays Capital

A record 1362 merger and acquisition (M&A) deals were withdrawn in 2008, for a total value of $923bn. Global volume was down 28% from 2007. Bank lending had dried up and the capital markets were in disarray.

"Early last autumn, corporates hoped that what was happening was a 'financial' problem that was not affecting them. Then Lehman happened and the crisis shifted. The brakes went on at corporates at a speed that they have never been seen before. So in the third quarter last year, M&A activity just froze," says Simon Dingemans, European head of M&A at Goldman Sachs.

The drying up of financing has clearly been a major factor in the slowdown of M&A - and it will be a significant factor in its re-emergence. "Banks remain very cautious. This in particular will keep private equity on the sidelines," says Mr Dingemans.

But interest was out there even before the markets bounced in March. While nobody denied the environment was tough, corporates were clearly aware that there were some well-priced assets out there. "It wasn't that corporates had given up on the idea of strategic acquisitions, it's just that there were times when they were not sure whether they were buying an opportunity, or catching a falling knife," says Mr Dingemans.

Activity has certainly picked up since spring, and one or two deals have been markers for the improving environment: Pfizer's acquisition of Wyeth and Schering-Plough's acquisition of Merck. "For one thing they were very sizeable deals; that attracted attention and gave everyone confidence that the market was still alive. Also, the fact that two big companies were doing stock deals in the market at that time was particularly important," says Mr Dingemans.

Other signs of the early stages of a recovery include the increase in hostile deals. "We are at that stage of the cycle when buyers and sellers often can't agree on valuations, resulting in more proposals being taken straight to the shareholders," he says.

However, Mr Dingemans cautions: "Things are happening again, but the probability that deals will succeed is still relatively low."

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Emmanuel Naim, head of equity structured products, SGCIB

Most innovative in equity derivatives

Winner: Société Générale

Shortlisted: Barclays Capital and JPMorgan

Société Générale (SGCIB) starts from a market-leading position in equity derivatives. But this was no guarantee of success in the most unpredictable of times for financial markets. Emmanuel Naim, SGCIB's head of equity structured products, attributes the bank's effective response to events at least in part to the stability of its staff.

"The staff turnover has been historically low, and this year even lower. This is important on the client side to build a long-term relationship, and on the structuring and trading side it is important for keeping our market know-how. This is an especially good thing when you have to reinvent your offer because the equity market scenario has changed," he says.

The combination of closeness to clients and market experience helped the bank react well to the rapid change in investor priorities in 2008, from leveraged products to capital protection from the downturn.

With valuations falling so low but volatility riding high, the team quickly grasped that clients would be interested to enter the market, but anxious about the timing. This conundrum led to the genesis of Compass, a six-year maturity product which allows investors to capture the return on the DJ Eurostoxx-50 index, but starting from the lowest point that the index reaches during the period, as measured on a quarterly basis.

"It is a very simple pay-off, and simplicity was the way to go in the past 12 months. Clients wanted clear visibility, and this product answered a particularly acute problem, it suited the scenario that clients expected - not only institutional investors, but also in the high-net-worth space," says Mr Naim.

The bank also seized the chance posed by the downturn to expand its business geographically, offering capital-guaranteed equity products for the first time in markets such as Turkey, where investors had become used to taking straight cash exposure on a steadily rising stock market.

And in the corporate space, the team helped clients to monetise the high equity market volatility, which enabled consolidators to buy stakes in acquisition targets at a discount of up to 10% to the prevailing market price.

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Kara Lemont Sportelli, head of EMEA interest rate and foreign exchange structuring, BNP Paribas

Most innovative in interest rate derivatives

Winner: BNP Paribas

Shortlisted: Barclays Capital and JPMorgan

In late 2008, when other banks were still in crisis management mode, the interest rates team at BNP Paribas was already on the front foot, presenting ideas to clients to manage or profit from unprecedented volatility.

"We made a conscious decision that 2009 was not going to be a year with a continuous flow of certain products. Every trade was going to be an individual problem requiring an individual solution - problems including funding, getting prices, liquidity. So we made a conscious effort to be as nimble as possible," says Kara Lemont Sportelli, head of Europe, Middle East and Africa interest rate and foreign exchange structuring at BNP Paribas.

Such rapid responses included buying back some of the call dates on a 10-year callable range accrual issue, to remove the risk that the issuer would need fresh funding if the call dates in January 2009 to January 2013 were exercised. In normal market conditions, this trade would not make economic sense. But when the issuer's credit default swap spread widened to 715 basis points (bps) in March 2009, the Libor plus 110bps that it had paid for the trade looked like very good pricing indeed.

BNPP's rates team are already looking at the next strategic opportunities, building on a strong presence in the Middle East to expand their emerging markets coverage. The team impressed clients in late 2008 with notes or deposits to take advantage of divergences in local and offshore interest rate markets in currencies ranging from the Moroccan dirham to the Kazakh tenge.

And the bank has also stepped up its algorithmic rates indices business, introducing momentum-based rate curve strategies Stratos and Polaris. Ms Lemont anticipates funds of algorithms gaining market share from traditional funds of hedge funds. "We disclose the underlying algorithms fully to clients to give them better transparency, the fee structures are lower than a hedge fund, and we can offer weekly liquidity," she says.

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Ralph Segreti, product manager for inflation-linked and fixed-income derivatives, Barclays Capital

Most innovative in Inflation Products

Winner: Barclays Capital

Shortlisted: BNP Paribas and JPMorgan

Innovation in inflation-linked products was put on hold over the past 12 months as the financial crisis froze markets. Transparency and simplicity were the order of the day as liquidity dried up and investors sought to kick start the markets. Barclays Capital has led the way in designing inflation-linked loans for its clients that were both transparent and solved various internal accounting and risk issues. According to Ralph Segreti, Barclays Capital's product manager for inflation-linked and fixed-income derivatives, the key to succeeding in this market has been about innovating processes rather than products.

"The top priority has been restarting the markets, improving transparency and liquidity and getting both tactical and strategic investors (and a number of dealers) to start regularly trading again," he says. Not an easy task at a time of severe aversion to derivative-based products. BarCap, however, impressed this year's judges through its commitment to its clients and the design and implemention of a series of innovative solutions to the current malaise in the market.

The judges were particularly impressed by developments at BarCap's South African subsidiary Absa Capital. It underwrote the country's first ever senior unsecured consumer price index bank note in June, on behalf of Absa Group. The R1.3bn ($174m) note, which has a coupon linked to South Africa's consumer price index, is impressive not just because of its innovation but by dint of the fact it reopened the market for South African senior bank debt.

Inflation itself has fallen across the world as the price of commodities has slumped in the face of falling demand. However, Mr Segreti warns that this situation is unlikely to last. "Inflation risks will become more evident over the course of the next year, as loose global monetary policies work their way through the system," he says. "Although inflation will remain low for the next few months, the markets will be increasingly dominated by investors looking to hedge out inflation risks."

BarCap's ability to adapt to an entirely new set of economic parameters and continue to provide a good service to its clients was an impressive achievement.

Most innovative in climate change and sustainability

Winner: Citi

Shortlisted: JP Morgan and Barclays Capital

In May 2007, Citi announced that it would direct $50bn over 10 years to address global climate change through investments, financings and related activities to support the commercialisation and growth of alternative energy and clean technology. It is both a measure of the seriousness with which Citi has taken this commitment, as well as the project's good business sense, that it has not slipped by the wayside during the financial crisis. By the end of 2008, Citi's wide-ranging portfolio of climate-related activities had reached $17.78bn.

One of several key projects is the Nobel Environmental Power project, a $741m 15-year construction and term loan that is the US's largest wind financing deal to date. Aside from the unfolding financial crisis, the timing of the deal was complicated by the looming expiration of the federal production tax cuts and accelerated depreciation benefits.

Citi and the other participants were able to push the norm for wind financings without a traditional power purchase agreement. The deal was backed by a 10-year commodity hedge, for which Citi took sole responsibility. Citi Commodities assumed the power purchase at the project pusbar despite the lack of price history at these specific locations. A pusbar price comes into existence only once a project becomes operational; however, in Nobel's case, the hedge had to be executed long before the projects were scheduled to commence operating.

There are a lot of uncertainties ahead for the climate change sector, and the ongoing legislative activity around climate change issues in the US and Japan may add to the economic incentives that are already provided through the EU Emissions Trading System.

"We see an improving environment to earn strong returns through the deployment of capital environmental and emission abatement technologies," says Garth Edward, head of environmental products at Citi. "A lot of the technology necessary to reduce emissions is actually available or at least understood but they need the extra push, the extra rate of return - say from an emission trading system - to enable their deployment."

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Blythe Masters, global head of commodities, JPMorgan

Most innovative in Commodities

Winner: JPMorgan

Shortlisted: Goldman Sachs and BNP Paribas

The past 18 months have been transformational for JPMorgan's commodities business. With the group's acquisition of Bear Stearns came Bear Energy in Houston, which materially expanded the bank's US operations. This was followed by the acquisition of UBS Commodities in Calgary, which further boosted its North American footprint. The bank has commenced trading in physical oil and refined products, substantially built out its environmental markets platform with the integration of ClimateCare, and started an agricultural commodities business.

Blythe Masters, global head of commodities at JPMorgan, says the bank is looking to grow the platform further, if it can find the right assets with both a good strategic and cultural fit for JPMorgan's business model. "We expect to grow our presence outside North America, including Asia, Europe and the emerging markets, and in oil, refined products and agricultural commodities, which are less fully developed than our natural gas and power franchise," she says.

The crisis has been beneficial to JPMorgan in more ways than one. Not only did it drop Bear Stearns into its lap at a rock-bottom price, but the increased focus on counterparty credit risk has pushed business its way. "JPMorgan benefitted from the resulting flight to quality," says Ms Masters. "As credit conditions tightened, commodity-linked financing has been in greater demand."

Innovation is central to the bank's proposition, says Ms Masters. From the introduction of new algorithmic trading strategies for investors, to the provision of complex energy management services for electric co-operatives, to crude supply optimisation for refiners, she says that the commodity business depends heavily on innovation as a way to differentiate its capabilities. "Commodity markets are more complex, geographically dispersed, capital intensive and inefficient than financial markets, and as a result the returns on innovation for the bank and its customers represent significant opportunities."

There are plenty of challenges ahead, but the major uncertainties arise from potential regulatory changes. "Our single greatest concern is the risk of unintended consequences that will impact our end-user customer base in the event that central clearing or exchange trading are mandated without exceptions as part of broader derivatives reforms," she says. "The potential introduction of exchange position limits without appropriate hedge exemptions raise similar concerns. Finally, developments in climate regulation could also have far-reaching implications, particularly by either promoting, or prohibiting, the nascent markets for carbon emissions."

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Reinhard Bellet, global head of dbX, Deutsche Bank

Most innovative in Retail structured products

Winner: Deutsche Bank

Shortlisted: BNP Paribas and Royal Bank of Scotland

It has been a challenging year for the structured products sector. Investors went back to basics and were interested in simple structures. The collapse of Lehman and an increased focus on safer, more liquid products with lower counterparty risk led to growing retail demand for UCITS (Undertakings for Collective Investment in Transferable Securities) products.

Ensuring that intermediaries, as well as clients, fully understand products has never been a higher priority. "These products are sophisticated and are not always easy to understand for retail investors. We were very careful to choose intermediaries that were giving the proper advice to the end client," says Reinhard Bellet, global head of dbX at Deutsche Bank. "We have to make sure that these products are not sold directly to retail investors without any additional advice."

Since the beginning of the year, however, demand has started to pick-up for more innovative products in terms of their underlying structures. In March 2009, Deutsche Bank launched the first ever exchange-traded fund to offer investors exposure to a basket of hedge funds, addressing investors' concerns about the lack of transparency and liquidity available on existing hedge fund products.

Foreign exchange has been a very important asset class, and against the backdrop of rising commodity prices there has been growing interest in commodity-related products. In October 2008, Deutsche Bank launched the first ever market-neutral commodity investment fund, which enables investors to generate positive returns in both bull and bear markets. The Commodity Harvest Fund buys commodity futures using a unique optimum yield technique that aims to identify which commodity futures will make the best returns when they are rolled over.

"The past year was dominated by plain vanilla products," says Mr Bellet. "The opportunities in commodities and foreign exchange are now huge. More and more asset managers and private bankers are using these products in their asset allocation strategies."

Most innovative in structured finance

Winner: Goldman Sachs

Shortlisted: Royal Bank of Scotland and Deutsche Bank

In the final quarter of 2008, the question that posed itself was whether the structured finance market would survive at all, rather than how it would look in the future. But in the months that followed, Goldman Sachs has played a significant part not only in ensuring its survival, but in shaping its new appearance.

With no UK commercial property-backed transactions since the third quarter of 2007, it took a brave banker to reopen the market in June 2009. Ben Green, European executive director of structured finance, says the use of a single, highly rated originator - retail giant Tesco - helped attract investors in the £430.65m ($700.9m) sale and lease-back deal that was sole-led by Goldman.

But there were other vital features in the deal to have lasting significance for the commercial property securitisation market. "The single tranche is important, as the CMBS [commercial mortgage-backed securities] market is still struggling with questions on inter-creditor relations and special servicers," says Mr Green.

The long-dated 30-year transaction was also helpful - as well as reducing short-term refinancing risks, it appealed to the pension fund audience that is key to reviving the market now leveraged investors are in short supply. The deal has already been followed up, with a £564.5m sale and lease-back financing in September 2009, again sole-led by Goldman.

On the other side of the Atlantic, the Term Asset-Backed Securities Loan Facility (TALF) arranged by the US Treasury and Federal Reserve was intended to act as intermediary to help investors take on state-backed leverage to buy into and restart the asset-backed securities (ABS) market. But it needed a benchmark deal to break the ice. The six-tranche Ford Auto Loan ABS fitted the bill, with 79% of the aggregate notional amount placed through TALF.

Goldman has also pioneered techniques to revive the ABS market outside TALF, including a $1.5bn total return swap (TRS)-based financing facility for 'AAA' rated student loan ABS originated by Sallie Mae. "Through the TRS, we were able to allow Sallie Mae to access funding markets and risk markets separately. There was not at that time a robust capital market bid for the straight ABS securities, though it has since recovered," says Michael Millette, head of Investment Banking Structured Finance at Goldman Sachs in New York.

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Sean Malone, head of corporate and structured loan capital markets, RBS

Most innovative in Loans

Winner: Royal Bank of Scotland

Shortlisted: BNP Paribas and Bank of America Merrill Lynch

It has been rare in recent times for Royal Bank of Scotland (RBS) to make headlines for the right reasons. The part-nationalised UK bank has suffered from the slings and arrows of outrageous misfortune as the financial crisis dealt an almost fatal blow to an overleveraged capital structure that was pushed a step too far with the acquisition of ABN Amro.

Despite all the turbulence, however, RBS's loans team has been carrying on with business as usual. In fact, the loans division hasn't just survived the ructions at the top of the bank, it has thrived. As loans houses across the developed markets scaled down their operations and retrenched, RBS worked hard to maintain its presence.

"The past 12 months have seen unprecedented conditions with banks and investors facing difficult decisions linked to capital, pricing and ultimately strategic direction," says Sean Malone, head of corporate and structured loan capital markets at RBS. "RBS made a concerted and conscious effort to stay close to its customers."

Mr Malone emphasises the bank's commitment to financing the needs of its clients at a time when many other funding options had run out. One way RBS was able to help its clients was through its use of Forward Start Facilities. These innovative structures provide clients with a binding and fully documented commitment from lenders to refinance their existing loans.

"These types of structures, now widely accepted, required a strong franchise and team to successfully drive the concept through syndication in extremely challenging times," says Mr Malone.

Perhaps the biggest difficulty for RBS, however, was convincing a sceptical client base of its commitment to the market after the UK government took a 70% stake in the troubled bank.

"RBS has clearly been through a difficult period and a number of our customers and competitors were sceptical about our ability and willingness to support our client base," says Mr Malone. "This award together with the series of mandates that stand behind it and our continued market presence are a very pleasing affirmation that we remain a market leader in terms of both innovation and execution and wholly committed to support our target clients."

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Badlisyah Abdul Ghani, CEO, CIMB

Most innovative in Islamic Finance

Winner: CIMB

Shortlisted: Deutsche Bank and Standard Chartered Saadiq

While sukuk markets in the Gulf states have suffered amid the global credit crisis, Malaysia's longer-established market of almost two decades, with a reliable pool of domestic institutional and retail investors, has remained in good health. About 200 deals have closed so far in 2009, and CIMB has managed many of them.

This has helped CIMB Islamic remain at the forefront of the sukuk business, and the bank's CEO, Badlisyah Abdul Ghani, says the structure of CIMB Group also plays an important part. "We operate on a dual banking leverage model, which means all the resources of the CIMB Group are fully utilised for the Islamic business on top of the conventional business, so CIMB Islamic does not have to start from a zero base, which gives us a position of advantage over competitors," says Mr Badlisyah.

He is optimistic about the bank's Islamic finance business in Indonesia, Brunei and Singapore, as local legislative frameworks become increasingly supportive, and is looking at Thailand as a medium-term prospect.

As the global economic downturn erodes corporate earnings, CIMB's activities have also focused on sukuk refinancing and liability management this year, including obtaining consent from noteholders to buy back securities as part of a capital reduction, to increase indebtedness or to change the sukuk structure. The bank advised road concessionaire Elite on refinancing an existing Bai Bithamin Ajil (deferred payment) sukuk with a Musyarakah (partnership) sukuk.

More volatile markets, especially for exchange rates, are also driving a rapid growth in demand for sharia-compliant derivatives to mitigate risks. "There are more customers who need to manage their risk in a sharia-compliant manner, so this business is naturally going through a growth spurt with a lot of new products, including Islamic cross-currency swaps, foreign exchange forwards and even credit derivatives. Of course we need to make sure that the regulatory frameworks are there to discourage excessive speculation," says Mr Badlisyah.

Deutsche Bank's Al-Miyar platform for issuing short-term sharia-compliant securities caught the judges' eye as a runner-up. Launched in January 2009, it is too soon yet to know if the project will be successful, but if it is, Al-Miyar has the potential to help create a genuine Islamic money market and ease the difficulties facing banks and companies that want to issue sukuk without underlying fixed leaseable assets.

Most innovative in Project and Infrastructure Finance

Winner: HSBC

Shortlisted: BNP Paribas and Standard Bank

Left with limited financing power, banks have had to choose carefully what project finance deals they could participate in during the past year. High-earning transactions for long-standing clients still seem to be the preferred strategy. Despite the reduced underwriting appetite and the high premium on liquidity, HSBC closed a number of transactions that were well received by the market and presented complex and interesting structures that have the potential to transform the project finance space.

The financing of the UK's M25 project, the largest road scheme in Europe, is a landmark deal that created a new benchmark for the structuring of cash sweeps on concessions that require long tenor financing, and is currently being explored for various further transactions across the world. Considering that banks' appetite for long tenor transactions had virtually dried up, it was impressive to note that a total of 16 lenders participated in the financing.

On the other side of the world, HSBC's project finance team was busy structuring the MRCB Southern Link deal for the construction of an expressway in Malaysia. This interesting structure brought together a bond, with junior and senior tranches, and a syndicated loan. There are not too many solutions in the project finance space and the successful combination of both tranches with the bank financing is even more impressive considering the interest that it generated from local investors.

Demand for infrastructure deals will continue to grow in the next years, particularly from the fast-developing economies in Asia. The challenge will be for project financiers to push innovative solutions in the market and meet such demand.

"There are good signs, especially in Asia, where liquidity is strong, especially with local banks," says David Gardner, HSBC's global head of project finance. "A lot of deals will come out of China and India, and in the oil and gas and infrastructure areas. Thanks to government stimulus packages, many infrastructure deals will be put on the market."

Most innovative in Prime brokerage

Winner: Goldman Sachs

Shortlisted: Credit Suisse and Barclays Capital

Any conversation about prime brokerage these days is about counterparty risk and risk management. As the market evolves from a single product - single asset-type margining - to portfolio and stress testing-driven margining, risk methodology and technology are increasingly important.

Two entrants in particular impressed The Banker's judges. Credit Suisse has created a wide-ranging portfolio of innovative solutions for the hedge fund community, which incorporate risk-based financing strategies and liquidation solutions.

It was Goldman Sachs, however, that presented the most compelling case with its innovative technology applications and risk management products. The stress test and collateral management process allows clients to stress portfolios in a variety of different market scenarios. Available financing is directly related to the risk and liquidity profile of the individual assets, allowing the optimal use of a portfolio's capital. The solution also enables a single risk and margin platform to cover the client's entire portfolio.

"Understanding what clients need is easy," says James Paradise, global co-head of prime broking at Goldman, "the challenge is all about execution, technology and the risk management process. Coming up with a product, and actually building it, really takes up a lot of work.

"It is particularly pleasing to win this award because historically we've always been considered very conservative in all things to do with risk and leverage. We still are and we want to be, that's a good thing. But we would have never been considered, five or six years ago, the most innovative bank in terms of products or client solutions in this particular space."

Goldman Sachs' solution sets the standard for the industry's approach on financing transparency and risk-based margining. "The world is going to get more competitive," says Mr Paradise. "Client-facing technology and reporting is going to become more important. We will continue to live in a multi-prime broking environment, where counterparty risk and diversification are central to the clients' decision making process."

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