The banker investment banking awards | 2010

With the two-year anniversary of Leh- ment Banking Awards entries – with some of man Brothers’ demise just passed, invest- the closest competition in categories such as Investment ment banks still face a difficult environment. sovereign advisory, restructuring, risk man- If the crisis is over, long-term challenges have agement and bank capital. Banking intensified. Banks await the final shape of US Other themes are a hangover from the financial reform as legislators tinker with financial crisis. The Lehman bankruptcy was Awards implementing the provisions of the Dodd- followed by confusion about the client assets Frank Act. And while they heaved a sigh of held in its prime brokerage; this year, the relief at the general thrust of Basel III, ques- protection of client assets in newly created 2010 tions remain about what will happen to por- bankruptcy remote vehicles was a central tions of bank capital – such as lower Tier 2 pillar in prime brokerage entries. and other subordinated instruments. And while investment bankers remain Some believe that banks’ recovery from under fire for anything from black-box trad- the crisis may already have peaked. With ing to outsized bonuses, the value they add to developed world economies still sluggish, clients was written in bold in our entries. The high-profile bank analyst Meredith Whitney quality of the entries – and the effort for cli- has predicted that securities firms around ents that they represent – has never been the world will have to cut as many as 80,000 higher. And this year, we saw more evidence jobs in the next 18 months as revenue growth than ever before of integration across banks’ begins to slow. businesses; solutions for clients that drew Against this uncertain backdrop, mar- expertise from multiple business silos, and kets continue to be jittery and unpredictable, often across multiple geographies. swinging from risk aversion to risk appetite. Every year The Banker’s Investment At the same time as equity markets suffer Banking Awards try to move away from from such volatility, leveraged buy-out funds measuring quality only by scale, to focus in are back in business. Few bankers are pre- on genuine value creation for clients and pared to say where they think markets will be markets. Our distinguished panel of inde- in one month, let alone six or 12 months. pendent judges – whose knowledge and skills come from every area of the market Certainty amid uncertainty and every part of the globe (see page 56) – Getting things right in such choppy waters is were looking for transactions that generate no easy task, but if the entries for The Bank- real cost savings, real risk reduction or real er’s Investment Banking Awards are any- returns for clients. thing to go by, the world’s investment banks Yet again, The Banker’s awards showcase are doing a fair job. All of the global econo- the tremendous value that this industry can my’s key themes were evident in the Invest- deliver. Categories ■ Most innovative investment bank ■ Africa ■ Retail structured products ■ Most innovative investment bank ■ Western Europe ■ Structured finance for corporates ■ Central and eastern Europe ■ Initial public offerings ■ Most innovative team ■ The Middle East ■ Loans and leveraged finance ■ Most innovative investment bank ■ Islamic finance for growth companies Most innovative investment bank for: ■ Infrastructure and project finance ■ Most innovative boutique ■ Bank capital ■ Prime brokerage ■ Bonds ■ Asset and liability management Most Innovative Investment Bank ■ Climate change and sustainability ■ Restructuring From: ■ Commodities ■ Risk management ■ Latin America ■ Equity linked ■ Foreign exchange ■ North America ■ Equity derivatives ■ Mergers and acquisitions ■ Asia ■ Interest rate derivatives ■ Inflation products

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2010 | the banker investment banking awards

Most innovative investment bank

Winner: Credit Suisse

When The Banker made Credit Suisse its past year, the bank has been building out – comprising the heads of the largest coun- Investment Bank of the Year in 2007, some rates, FX and credit, and the flow business tries and products, and regional CEOs – considered it a premature choice. Brady associated with those. which will meet regularly to share best Dougan had only just taken the helm at “Last year, we increased our sales force practice and generate opportunities. group level and the bank was still in the by a third and invested in our technology This is much more than a talking shop, early stages of its new strategy. platforms. As a result, we are starting to see says Mr Varvel. “The structure ensures real Now, its investment bank is increasingly market share and revenue gains and expect connectivity between regions and businesses held up as a model that others should emu- that to build in the coming year,” he says. and makes the country CEOs accountable late. It has a conservative model based on “Given our brand and momentum, increased for growing cross-border business. It makes capital efficiency and low risk. It has led the share is for us to take, but it will come down it much easier for each country CEO to tap industry in terms of transparency about to how well we execute.” into the bank’s global network to execute market positions. It has applied fresh think- business for their clients, for example; per- ing to the dialogue about compensation. Emerging markets push haps finding an anchor investor that a client There can be little doubt that the bank’s The biggest push, however, is building on needs for an initial public offering. We are new model is working. For four of the past Credit Suisse’s existing strength in the seeing a lot of connectivity across markets five quarters, pre-tax returns on capital emerging markets. The bank has rethought from Asia to the Middle East to Latin Amer- within the investment bank have been how it organises the business. Previously, ica. The Council brings together the knowl- between 37% and 40%. In 2009, the bank’s emerging markets were lost inside product edge of our clients and the capabilities of the return on equity was 18% – second only lines and regional businesses, now the bank bank in a systematic way.” to Goldman Sachs at 23%; in the first has broken it out as a separate business and quarter of this year that rose to 22%. strategy. A central pillar of that is the cre- Meeting challenges Yet while Goldman had risk-weighted ation of a Global Emerging Markets Council There are challenges ahead. But the bank is assets of $432bn, Credit Suisse had RWAs approaching them with what is fast becom- of just $215bn. ing a Credit Suisse characteristic: creativity. Credit Suisse’s success is evident in the The new conservative capital model league tables, where it has top 10, and often puts constraints on the business; capital top five, positions in most of the major busi- efficient also means capital light. In one of ness lines. It may not be generating the its businesses, the bank has come up with a very highest revenues, but this is not the clever solution. Credit Suisse used to run a point, says Eric Varvel, who took over as large structured credit book in the emerging CEO in June. markets, providing seed capital to clients “Our model is not built to drive the high- that could not raise it in the public markets. est revenues or the highest return on equity Under its new capital efficiency regime, a in a single quarter or a single year. It is big structured credit book is out of the ques- designed to provide attractive returns to our tion. To ensure it did not lose those clients, investors over a cycle.” the bank raised $750m from its shareholder That does not mean that the bank is not base – adding to its own capital of $250m – focused on growth. Mr Varvel believes that to create the Emerging Markets Credit both top-line revenue and market share Fund, which will be managed by Credit growth is there for the taking. It has seen Suisse specialists out of the asset manage- some good upward movement in its invest- ment business. ment banking business. In the US, where it “This third-party capital model gives us had been lagging behind its competitors, an additional means to provide capital to management changes and senior hires have Our model is not built to emerging market corporates, leveraging our paid off. It has also seen gains across its drive the highest revenues strong track record in emerging markets equity businesses, and Mr Varvel says credit,” says Mr Varvel. the bank is well positioned to capitalise or the highest return on As risk appetite returns, Mr Varvel says on the return of risk appetite and greater equity in a single quarter the bank is under no illusions that its con- clarity around regulatory and political servative model may make it hard to “over- developments. or a single year. It is achieve” in comparison to competitors who Similarly, Credit Suisse has some strong designed to provide take on more risk. But that is the point, says fixed-income businesses – including resi- Mr Varvel: Credit Suisse’s business will be dential mortgages and leveraged finance – attractive returns to less risky. “We have created a different and given market positions, and increased our investors over a cycle model, one focused on clients and capital volume and activity in both businesses, Mr efficiency that takes less illiquid and propri- Varvel expects significant gains. Over the Eric Varvel etary risk than many of our competitors.”

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telecommunications service provider. Previous banking firms worked for Investment Banking include Salomon Brothers and BZW. Awards 2010: Judges Dawid Konotey-Ahulu is co-chief executive of investment consultancy Redington. Before founding Redington, Jeremy Amias is a founding partner investment banking for Lehman Brothers he was responsible for Merrill Lynch’s of Amias Berman & Co, based in Hong in Europe. Previous roles include working pensions and insurance group, Europe. Kong. Prior to that, he was COO for global in capital markets for BNP Paribas. Before banking, he qualified as a barrister resources firm Noble Group. Previously, of Lincoln’s Inn. he headed fixed income sales, trading Marcia Favale-Tarter is an independent and origination in the Asia-Pacific region advisor to BTA Bank and Alliance Bank. Geraldine Lambe is markets and for Citigroup. She is also a senior advisor to the Office investment banking editor, The Banker. of the Prime Minister of Kazakhstan Philip Alexander is finance editor, The regarding the country’s financial sector Hubert Pandza is a non-executive director Banker. and debt restructuring. Previous roles have at several banks and corporates from included portfolio manager for Advent eastern Europe, and advises companies Zeshan Ashiq is the founding partner of Capital and Brevan Howard, and head on their investments in the region. structured finance and securitisation firm of CEEMEA and Latin America corporate Previous roles include CEO at Deutsche Shooters Hill Capital. Previously, he worked bond research at UBS. Bank Moscow and business group director at Financial Security Assurance, where at the European Bank for Reconstruction he was jointly responsible for European Dr Caleb Fundanga is governor of the and Development. collaterised debt obligations. He also Bank of Zambia. Previously, he served oversaw arbitrage and regulatory as senior advisor to the president of the Mark Richards is a partner and head of capital-driven transactions utilising African Development Bank. Before joining the global financial services sector team funded and synthetic risk-transfer the ADB, Dr Fundanga held several senior at Actis, which specialises in private structures backed by investment- positions in the Zambian government. In equity investment in emerging markets. grade and high-yield corporate risk. 2007, he was named The Banker’s Central Previously he spent 18 years at Barclays Banker of the Year. Bank, where roles included CFO of Saad Azhari is chairman of the board Barclays International Banking. and general manager of Blom Bank, Nassib Ghobril is the chief economist and and chairman and general manager of head of economic research and analysis at Zubyr Soomro is chairman of the Karachi Blominvest Bank. His CV includes stints Byblos Bank Group. Previous roles have Stock Exchange. Prior to that, he played a at the Swiss Options and Financial Futures included head of research posts at Sandar key role in Pakistan’s financial sector Exchange and PBZ Privatbank, an affiliate Investment House and Lebanon Invest. reform as chairman and president of the of UBS. He is vice-president of the now privatised United Bank. Previously, he Association of Banks in Lebanon. Lado Gurgenidze is co-founder of Liberty had a long and international career at Citi. Investments, which focuses on financial Dr Freddie Baz is group chief financial services institutions in frontier markets. Alejandro Valenzuela is CEO of officer and strategy director for Bank Audi. In 2006, he took time out of his banking Banorte. Earlier roles include director of Alongside his responsibility for finance and career – which has included senior roles international affairs at Banco de Mexico, budgeting functions, he is responsible for at ABM Amro, Putnam Lovell and as head chief of staff for Mexico’s minster of finance development of group strategy. He is of Bank of Georgia – to host the Georgian and public credit, managing director for a board member for Bank Audi and version of The Apprentice TV show. In 2007 International Treasury Affairs and director chairman of the board for Bank Audi and 2008, Mr Gurgenidze served as the of public debt and external trade financing. Saradar in France. prime minister of Georgia. Anthony Williams is non-executive Robert Binder, manages the Criatec Professor Roszaini Haniffa is professor director of FBN Bank, the London-based Fund, the largest seed capital fund in Latin of accounting at Bradford University subsidiary of First Bank of Nigeria. For America. During his 40-year career, he has School of Management. She is the 20 years he was responsible for HSBC’s founded Antera Gestão de Recursos, the examiner for the Association of sub-Saharan African business. Early roles Brazilian Venture Capital Association and International Accountants and the Bahrain include stints in Sudan and Cameroon for Brazilian market-making firm Bovespa. He Institute of Banking and Finance, and the Barclays Bank and manager of Gulf has also previously worked as chief joint editor of the Journal of Islamic Financial Services in Bahrain. financial officer for Texaco Brazil. Accounting and Business Research. Brendan Wood is the founder of Brendan Benoit d’Angelin is a founding partner Andrew Harrington, is co-founder of AHV Wood International, a capital markets of advisory boutique Ondra Partners. Associates, a corporate finance advisor to consultancy which specialises in Previously, he was CEO of Centaurus privately owned businesses. In 1998, he transaction debriefings and Capital, and before that, co-head of founded the UK’s first convergent performance reporting.

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ated a special award for a bank that has markets (DCM) at HSBC, this fluent set-up harnessed its investment banking capa ­ is vital to adjust to each key theme that bilities most effectively for its corporate appears in today’s volatile market condi- banking clients, and HSBC was the clear tions. As bank lending became scarce, winner. The group created its combined HSBC took the lead in allowing unrated global banking and markets business in corporates to access capital markets, 2008, which included merging its market- including Thomas Cook, Air France and leading project finance team with its Evonik. Samir Assaf, head resources and energy sector corporate “We have had a huge number of wins in of global markets, HSBC banking coverage. the event space that bring together those The bank also merged the origination different competencies, plus balance sheet side in 2009 into a single global capital strength and the ability to derisk into the Most innovative Investment financing group across equity and debt capi- capital markets. That is important for cli- Bank for Corporates tal markets, structured and leveraged ents who are moving as the world changes,” Winner: HSBC finance, to deliver financing seamlessly in the says Mr Lake. most appropriate format, with an integrated Robin Phillips, HSBC’s head of global Regulators seem unsure about what derivatives team supporting all aspects of the banking, cites the rise of investment flows they want from investment banks. Mea- financing business. Capital allocation deci- into, from and between emerging markets sures to discourage proprietary trading sions can then be made according to each cli- as another theme that plays directly to the accompany suggestions to split investment ent, on a multi-product basis. bank’s genuinely global footprint. Recent banks from plain vanilla banking. Yet, the “We have created an integrated model ground-breaking deals for HSBC included most highly integrated corporate and that starts with coverage of the client, prod- the first primary listing of a French beauty investment banking models generally uct support for the client on the primary products retailer company L’Occitane in withstood the crisis better than their peers, market side, then trading, sales and Hong Kong, and European power firm and are also more likely to generate reve- research on the secondary side to support ABB’s stake enhancement in its Indian sub- nues from serving clients rather than play- coverage efforts,” says Samir Assaf, HSBC’s sidiary, which is the largest voluntary offer ing the markets. head of global markets. by a foreign company in India and achieved In recognition of this, The Banker cre- For Spencer Lake, head of debt capital full acceptance.

Most innovative Team advice on their communications around the ate financial strategies,” says Matthieu Winner: Lazard financial markets has become a more Pigasse, head of the sovereign advisory Shortlisted: HSBC (bonds) and Credit important weapon in the sovereign advi- group at Lazard. Suisse (bank capital) sor’s armoury. In a bid to give it an edge in terms of “Emerging market governments are by understanding what the markets and rat- Most Innovative Investment and large in better shape in terms of fiscal ings agencies need to know, Lazard, which Bank for Sovereign Advisory stability and growth prospects, and we con- wins this award for the second year in a row, Winner: Lazard tinue to do a lot of work with them on their recently hired Pierre Cailleteau, previously Shortlisted: HSBC and Rothschild financial strategy. Advice from non- head of sovereign ratings at Moody’s. conflicted institutions such as Lazard is Lazard has won some of the biggest The sovereign advisory space continues critical to enable sovereigns to negotiate mandates this year, including the twin roles to be a busy and demanding discipline. the best possible placement terms with of advising the Greek government on its As Western governments continue to banks and investors. But our knowledge of financing strategy and assessing the grapple with budget deficits and sluggish rating agencies’ methodology is of para - strength of the country’s banking sector. economies, governments from the dev­ mount importance in today’s world in Other key mandates are for Alliance Bank eloping world face other challenges, includ- assisting governments to design appropri- and BTA Bank in Kazakhstan. For Alliance, ing for some the new requirement to Lazard was retained as exclusive financial manage the dark art of financial com ­ advisor to initiate its $4.5bn foreign and munications with capital markets and domestic debt restructuring, and by BTA as ratings agencies. financial advisor to initiate the $12.2bn The traditional sovereign advisory busi- debt restructuring. ness has centred on working with govern - The bank also advised the government ments in areas such as fiscal policy and debt of Côte d’Ivoire in the exchange of its restructuring, and on public sector restruc- $2.9bn defaulted Brady bonds for a new turing – latterly focused on the banking Matthieu 23-year bond totalling $2.3bn. With an sector –and these continue to be major driv- Pigasse, head acceptance rate of almost 100%, this repre- of the sovereign ers for advisory business. More recently, advisory group, sents the largest sovereign international however, the ability to give governments Lazard bond in Africa.

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2010 | the banker investment banking awards

Most innovative Investment The audacious bid is typical of the firm, best to be focused, opportunistic and Bank for growth companies which has transformed itself in the past patient at the right times.” Winner: Jefferies couple of years, rapidly adding product The firm is winning a lot of business. Shortlisted: Houlihan Lokey lines and headcount. Since the start of 2009, Jefferies has “We have never had headcount targets executed more than 1300 transactions Jefferies officially entered the futures or business mix goals,” says Mr Handler. valued at more than $397bn; including business in September, when it announced “Instead, we strive for continual improve- 516 advisory mandates, 136 equity transac- the hiring of a rival firm’s CEO and the ment and are constantly on the look-out for tions, 588 debt offerings and 69 lead foundation of an entirely new division for individuals, teams and businesses that can arranged loans. the firm. This gutsy move, and its mem­ leverage our existing businesses, are high- And, while it may focus on growth com- bership of upstart trade group the Swaps integrity and client-oriented. We try our panies, it also works on some very big deals and Derivatives Markets Association, – including as financial advisor to energy which has emerged as an opponent of big company XTO in its $41bn acquisition by banks’ dominance of the derivatives space, Exxon Mobil and as sole financial advisor to tells you all you need to know about Jeffer- Statoil in the $3bn sale of 40% of the Pere- ies. It has big ambitions and will fight to grino field off Brazil to Sinochem. achieve them. We never had headcount As Jefferies continues to grow so aggres- The firm no doubt hopes that new regu- sively, will the firm’s collegiate culture – lations covering over-the-counter deriva- targets... We strive for which it sees as a real differentiator – tives offer a unique opportunity to gain continual improvement come under threat? Absolutely not, says Mr market share. But at such an uncertain time Handler. for the industry, this is still a risky strategy. and are constantly on the “Even with 3000 people globally, indi- This does not phase chairman and CEO look-out for individuals, viduals and small groups of people can still Rich Handler. “We have found it is usually make a big difference. We work hard to smarter to invest more heavily in times of teams and businesses that make sure our new hires have the same val- uncertainty because the opportunities are can leverage our existing ues as our existing partners. There is no abundant and usually more reasonably place for arrogance, gamesmanship, poli- priced,” he says. businesses Rich Handler tics or bureaucracy at Jefferies.”

became all about balance sheet – lost the abil- getting it mandates. Moelis won its place ity to offer that kind of service. But it is not advising the Dubai government on the Dubai about size, he says, it is about focus and culture. World restructuring having previously “That, and quality of advice, is what you advised Dubai World on the renegotiation of have to deliver to clients,” says Mr Moelis, who its agreements with MGM Mirage around the describes himself as an investment banker to troubled CityCenter project in Las Vegas. the bone. “It’s important to be big enough to From Moelis’ viewpoint, the process high- Ken Moelis, capture enough of the information flow – lighted the conflicts that lending banks face founder, Moelis because that’s what adds value to the client when they also offer advisory services. & Company proposition; but in the process you mustn’t Mr Moelis believes that in the new regula- lose the partnership culture which ensures tory environment, independents will gain that you put your client first. Too many banks more market share. “There will be no more Most innovative Boutique end up with the team in New York competing giving away long-tail risk for short-term gain. Winner: Moelis & Company with the team in London, and that adds no From now on, capital will be priced more Shortlisted: Evercore Partners value to the client.” accurately; that leaves companies free to In Moelis’ flat partnership structure, unbundle capital from advice and go and get Only three years old, Moelis & Company nearly every banker is a managing director. their advice from whomever they want. Cli- is already punching well above its weight. In The firm hires people who get the culture and ents know the real value of long-term rela- the past 12 months it has won some seriously gets rid of the people who do not. tionships and independent advice.” weighty mandates, including key roles in the “We have one global bonus pool and we $26bn landmark Dubai World restructuring, only do well if we do well as a firm,” says Mark the $1.6bn sale of GLG to Man Group, and the Aedy, who heads up the firm’s Europe, Middle $1.6bn merger of Pilot with Flying J. East and Africa business. “There is ‘no eat Not unnaturally, founder Ken Moelis says what you kill’ mentality here; that under- it is because his firm is focused on delivering mines the soul of a partnership, and encour- There is ‘no eat what independent advice. He adds that he is often ages people to push through deals at virtually you kill’ mentality here misquoted as saying that investment banks any cost to get their numbers up.” which grew too big – when the business The firm’s ‘client-first’ strategy is certainly Mark Aedy

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outside of its home market of Chile. a time when liquidity was scarce, and “We’re an independent firm; we follow financed a series of expansion projects traditional industry principles: we trade as an including a domestic acquisition. agent, we never trade on our own account.” Outside of Chile, Larrain Vial’s client Mr Larrain believes that the firm’s inde- portfolio includes Peru’s largest lender, pendence has played a significant role in Banco de Credito del Peru, for whom Larrain securing new deals. “The principles that Vial structured a $107m, five-year bond that made us boring, so to speak, a few years ago, raised money in the Chilean market and, Fernando Larrain, chief executive, now make us really competitive.” according to Larrain Vial, became the most Larrain Vial The bond issue for Transelec, Chile’s highly traded bond in Chile last year. largest electricity transmission company, is “We’d like to be a firm that introduces Best Investment Bank from representative of a portfolio of well-struc- international investors to [South America],” Latin America tured and successfully executed deals. Local says Mr Larrain. “We’re expanding [our Winner: Larrain Vial currency notes were issued to finance a model] to Peru and Colombia and we Shortlisted: Itau’ BBA simultaneous conditional tender offer of [already] have research [coverage] for Peru- $300m in the US, with the aim of repurchas- vian and Colombian companies. We pride Over the course of the past eight decades, ing existing bonds. The complex liability ourselves on being local in those markets, Larrain Vial has grown from a securities management exercise allowed Transelec to because we’ve been in those markets for brokerage firm to a full-service investment restructure its debt, which was at higher lev- many years.” bank offering services to retail, corporate els than that of peers following the leveraged and institutional clients. buyout by BAM Consortium in 2006. The Last year saw Larrain Vial involved in a local currency bond achieved the lowest number of deals that were as varied as they spread compared with similarly rated com- were innovative. Chief executive panies who issued in the same year. Fernando Larrain is proud of the bank’s In the equity markets, the initial public The principles that made us offering for casino company Enjoy was the achievements and of how a conservative boring... now make us really firm has so successfully managed to only Chilean business to list in 2009. The grow and service clients both within and transaction enabled Enjoy to raise capital at competitive Fernando Larrain

Best Investment Bank from challenges. If BAML’s CEO has identified North America that 75% of the group’s revenues are still Winner: Bank of America generated in the US, that means that there Merrill Lynch is plenty of room to grow the non-US busi- Shortlisted: JPMorgan ness. The strategy is well under way. The bank has already hired new heads of the Tom Montag, Only 18 months ago, Bank of America president of bank in Australia, Turkey and India. It has a Merrill Lynch (BAML) was still wracked by global banking new head of markets in South Africa and is integration pain. Now, it is beginning to and markets, looking to hire a new head in Russia. Bank of America demonstrate that all the suffering has been Merrill Lynch “To give you some idea of how the focus worthwhile. Often in top five or higher of the business is shifting outside of the US, positions in the global league tables for we have increased international headcount loans, bonds, equities and mergers and businesses. We will soon have a powerful in both our business and support staff, acquisitions, the combined entity is flexing new risk engine. These things are less obvi- while business headcount is down in the its muscles. ous but incredibly additive to the corporate US,” says Mr Montag. “Looking at gross Tom Montag, president of global and investment bank.” domestic product growth figures globally, banking and markets at BAML, hesitates to To fulfil the bank’s ambitions, however, the logic of that strategy is undeniable.” use the word remarkable, but certainly Mr Montag is under no illusions that there In general terms, Mr Montag believes believes the bank has come a long, long way is still a long way to go. “Our goal is to be that BAML is well positioned for the new since the dark early days of the painful the top international, universal banking regulatory and business environment that acquisition. group – we still have some work to do. is emerging. “We will have to make some “I feel incredibly proud about how far We still have gaps in some businesses and adjustments in some of the more capital- we’ve come,” he says. “The evidence is there some countries, such as Russia and Viet- intensive assets that we hold, but it will not in every part of the franchise – and not just nam, for example, where we need banking require a change to the strategy. As the mar- in the league table businesses. For example, licences. We do not yet have a securities kets become more cash- and less derivative- there has been a huge technology push licence in China. But we are working to fill oriented, we are well positioned both in across many areas, such as electronic trad- those gaps.” terms of our financing and capital-raising ing and our corporate cash management There are as many opportunities as capabilities for our clients.”

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2010 | the banker investment banking awards

Best Investment Bank from “The whole world sees Indonesia as a big Asia growth story and we are increasingly grow- Winner: CIMB Investment Bank ing our business [there],” says Mr Charon. “In the not too distant future, CIMB sees Malaysian banks are forecast to enjoy The whole world Indonesia as its single biggest income earnings expansion this year, helped in no stream – even for the investment bank.” small part by the country’s economic recov- sees Indonesia as a big Increasingly lumped together by ana- ery, boasting second quarter gross domestic growth story and we lysts with the four major BRIC economies, product growth of 8.9% and a surge in pri- Indonesia is expected to yield a strong ini- vate sector activity. are increasingly growing tial public offering pipeline in coming CIMB Group, Malaysia’s number one our business [there] months for the investment bank. deal-maker, is no exception. In August, It also expects to develop its franchise in CIMB reported a record second-quarter net Dato’ Charon Wardini Mokhzani Vietnam, having in March received approval profit, boosted in large part by a strong from the Vietnam Securities Commission to rebound in the group’s corporate and acquire an equity interest in VFC Securities investment bank. – now called CIMB Vinashin Securities. But although CIMB Investment Bank is Kong, have underpinned this strategy. The bank is more cautious, however, on headquartered in Malaysia, the institution’s “We were fortunate because we managed China, where it has acquired a 19.9% stake top management have worked hard to build to make some good acquisitions and that in Bank of Yingkou, based in China’s what Dato’ Charon Wardini Mokhzani, has helped give us the scale to achieve this. Yingkou city. deputy chief executive officer for corporate That has really given us the platform,” says “We’re realistic, there’s no way we would and investment banking at CIMB Group, Mr Charon. be able to gain the same size and scale as the describes as a “truly” integrated south- The Indonesian acquisitions have big Chinese banks,” says Mr Charon. “In east Asian bank. “That’s what we wanted proved particularly important: the country that case we may look at smaller companies to be: the core south-east Asian markets has been tipped by analysts and the bank’s rather than the biggest deals in China; and are everything.” top management to become CIMB’s largest we will probably focus more on mid-market Savvy acquisitions in several markets, market – outstripping its home market of deals – but a mid-market deal in China is a including Indonesia, Thailand and Hong Malaysia. pretty sizeable transaction,” he adds.

Best Investment Bank from uniquely positioned to capitalise on the grow- Africa ing proportion of investment in Africa that Winner: Standard Bank flows from other emerging markets. ICBC provided an $825m 20-year facility as part of When it comes to leading the capital mar- the Morupule power station in Botswana, the kets into frontier economies, there is no such first large-scale funding jointly arranged thing as plain vanilla, says Helmut Engel- between Standard Bank and its shareholder. brecht, head of African investment banking at “If Africa cannot unlock power, it is going Standard Bank. A $1.6bn power station in to struggle. Governments understand this, Botswana and $330m mining project in and there are a lot of good discussions going Malawi typify the bank’s ability to structure on. Because our own growth depends on par- deals in a way that finds answers to the distinc- ticipation in the real economic sector, we must tive questions that such markets pose, often help to find a solution – there are some all- without the benefit of credit ratings or research bank solutions, but some projects will need coverage by the bulge bracket global banks. finance solutions, so it is a sector we are stay- We aim to be a locally “We aim to be a locally relevant investment ing close to,” says Mr Engelbrecht. relevant investment bank in bank in our main African markets. Other With bank balance sheets under pressure banks pitched for this business, but we have globally, local debt capital markets continue to our main African markets the knowledge of exactly what the local mar- develop as an alternative source of financing. Helmut Engelbrecht kets can do and which foreign investors are Standard Bank led the largest South African active in which markets. Mostly, there is local municipal bond issue to date, a R2bn ($780m) capital, and knowing exactly how deep it goes deal for the city of Cape Town in March 2010, and when you have to move beyond it is one of and has a healthy local debt pipeline in South our core strengths,” says Mr Engelbrecht. Africa and Nigeria. In addition, Mr Engel- With a subsidiary in Brazil, a stake in Rus- brecht believes some transformative initial sian brokerage Troika Dialog, and Industrial public offerings could occur across Africa in and Commercial Bank of China (ICBC) as its 2011 – and Standard Bank will certainly be own 20% shareholder, Standard Bank is also competing for mandates.

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clearly put in place the building blocks for tic to believe that we could have achieved outperformance. And it is not all about the that in such a short space of time,” says Mr Lehman Brothers acquisition. de Vitry. “We have moved a long way Benoit de Vitry, While a good chunk of Barclays towards where we want to be in terms of head of global Capital’s growth momentum is due to building out the cash equities business, for markets – trading, Europe the acquisition of Lehman’s North example, in Europe and Asia, but this is a and head of American business, that is not the whole three- to five-year strategy.” commodities picture, says Benoit de Vitry, head of global BarCap’s core risk management and and emerging markets, Barclays markets – trading, Europe and head of debt businesses, however, continue to out- Capital commodities and emerging markets at perform the rest. As banks continue to Barclays Capital. derisk, everybody is chasing the flow busi- “The Lehman acquisition was trans­ ness. Few have done a better job of getting Best Investment Bank from formational. Its businesses were very more of this business than BarCap. The Western Europe additive to our platform. But much of reason for its continued success, says Mr de Winner: Barclays Capital BarCap’s success is down to our strong Vitry, is that it has been a flow monster for Shortlisted: Deutsche Bank and HSBC organic growth over the years and the inte- several years. “Once you are strong in the grated, flat nature of our structure, which flow business, it creates a virtuous circle In the early stages of the financial crisis, means that there is great communication and more flow comes your way. It enables many analysts were sceptical about the rel- between product lines and between us to be aggressive in price and volume – to atively low losses that Barclays was report- regions. This flow of information helps to the benefit of our clients.” ing and its strategy to avoid taking help generate ideas and best execution across And he is doubtful that new entrants from the UK government. But any niggling the business.” will be able to take business away from the doubts have been laid to rest by the bank’s If BarCap’s equity and merger and established flow players. “For most markets performance over the past two years. acquisition businesses have not yet broken there is not enough room for all banks to be The group’s 44% increase in the first into the very top tier of global investment flow monsters,” he says. “We maintain our half of 2010 year-on-year pre-tax profit banking, then it is just a question of time. position because we continue to invest in may have been supported by a number of “While we aim to be in the top three for all our systems and processes, and stay non-recurring items, but the bank has of our business lines, it would be unrealis- focused on innovating for our clients.”

The investment is already beginning to tional markets is not just about size – bringing pay off. Even before the financial crisis new techniques to Russia is also part of the reached Russia, VTB’s strategic plan envis- agenda. VTB Capital has taken a leading role aged that investment banking would reach in supporting the emergence of private equity break-even only from 2010 onwards, yet and venture capital in the local market. VTB Capital notched up a net profit of about In October 2009, VTB Capital’s princi- $500m in 2009. In the process, it is proving pal investment arm teamed up with US buy- the philosophy behind VTB Capital’s cre- out firm TPG Capital to take a 35% stake in Yuri Soloviev, ation: that international capital markets supermarket chain Lenta. The partners CEO, VTB Capital intermediation in Russia does not have to have since engaged in a sometimes acrimo- rely on foreign investment banks that scale nious struggle with other shareholders to back their Russian activities when times get strengthen Lenta’s corporate governance. tough in their home markets. And in June 2010, another VTB Capital Best Investment Bank from A role in the giant Rusal initial public investment, Russian Navigation Technolo- central and eastern Europe offering (IPO) ushered VTB Capital into the gies, became the first Russian company Winner: VTB Capital top 10 bookrunners for European equity sponsored by a venture capital incubator to capital markets in the first half of 2010. The launch an IPO, with the bank acting as In a country where many blue-chip compa- bank was also third in the league table for financial advisor on the share issue. nies are state-owned, it helps to be the invest- Eurobond issuance from the Common- ment banking arm of a state-owned bank, wealth of Independent States (CIS), ahead of especially if that bank is the country’s second top emerging market bond houses such as largest corporate lender. But even so, by any JPMorgan and Deutsche Bank. And this was measure the past year represented a break- before September 2010, when it became the through for Russia’s VTB Capital. Since hir- first Russian bank to lead a Ukrainian sover- ing Yuri Soloviev from Deutsche Bank as eign Eurobond issue. VTB has also leap- By any measure the past year founding CEO in April 2008, the bank has frogged Troika Dialog to become the top represented a breakthrough recruited about 750 staff, built around experi- bookrunner for rouble bonds. enced hires from the bulge bracket. A Russian bank competing in interna- for Russia’s VTB Capital

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Best Investment Bank from “The Syrian market is still nascent, but fidence in the distribution capabilities of a the Middle East it is full of potential, with attractive debt capital markets business launched in Winner: EFG Hermes demographics. In general, everyone from early 2009 that it fully underwrote a bond the target company to the Syrian regulatory issue of E£1.5bn ($274m) for local mobile Headquartered in Egypt with a presence authorities was extremely co-operative on operator Mobinil less than a year later, in across the Gulf states, a controlling stake in every level,” says Mr Awad. January 2010. This was the first time that Lebanon’s Credit Libanais purchased in In its home market, EFG had such con- an Egyptian bond issue had been under- August 2010, a Jordanian brokerage bought written purely by an investment bank, with- in June 2010 and a Syrian subsidiary out the balance sheet of a commercial bank opened in March 2010, EFG Hermes has alongside it. become the first truly pan-Middle Eastern “We took a calculated risk because we investment bank. Karim Awad, EFG’s head knew the investors to which we could sell of investment banking, says the expansion the product, we structured the deal prop- will capitalise on showing new opportuni- The Syrian market is erly for them, and it was good from the issu- ties to existing Egyptian clients in the first er’s perspective because it wanted to raise instance, but developing a local client base still nascent, but it is debt from outside the banking system,” says in each market is central to the bank’s full of potential, with Mr Awad. longer-term plans. The bank has already won follow-up The Syrian subsidiary has already attractive demographics. business, launching a bond for E£300m for closed its first transaction, and the country’s In general, everyone from Orascom Construction Industries, which first cross-border merger and acquisition will be targeted at a similar non-bank inves- deal, when acting as sole buy-side advisor the target company to the tor base. And a combined E£1bn interna- for Egyptian real estate company SODIC’s Syrian regulatory tional institutional and local retail initial purchase of a 50% of Syria’s leading devel- public offering for agro-industrial firm oper Palmyra, for $40.5m in June 2010. Mr authorities was extremely Juhayna in June 2010 could kick-start a Awad believes the deal can open the way for co-operative on every level dormant equity market, but Mr Awad says companies in Egypt and elsewhere to look that Egypt will continue to correlate closely on Syria as a viable investment destination. Karim Awad with trends in the US and Europe.

Suisse, says the strong integration of func- Credit Suisse also helped European banks tions within the investment bank helped to maintain access to the Tier 1 market despite navigate volatile times. These facets include regulatory uncertainty surrounding hybrid advisory services – both for the banks them- capital, as joint bookrunner on the E1bn Tier 1 selves, and for governments grappling with perpetual issued by France’s BPCE in March systemic risks – equity and debt capital mar- 2010. This allowed the bank to call the bond kets teams, and trading desks that were pro- at par, without penalties, if it ceases to qualify Nick Williams, viding insight into the likely evolution of under new capital regulations. head of EMEA equity capital prices across most asset classes, to help advi- “The BPCE transaction re-opened the markets, Citi sory teams calculate possible capital needs. European hybrid Tier 1 market, and high- The work for Bank of Ireland, to which lighted for investors that banks might need Credit Suisse was lead advisor, provides a to replace their current form of capital if Most innovative investment striking example of this joined-up approach. new regulations required. The call at par bank for Bank capital In the space of a few months, the Irish bank mitigated issuer concerns, while investors Winner: Credit Suisse refinanced maturing obligations using took confidence from the potential for Shortlisted: Bank of America Merrill government-guaranteed bonds, transferred grandfathering to reparticipate in this mar- Lynch and HSBC assets to Ireland’s National Asset Manage- ket at current levels,” says Sandeep Agarwal, ment Agency, and held a simultaneous firm Credit Suisse’s head of European financial With uncertainty swirling around the rights issue to the state and key institutional institutions debt capital markets. Basel III proposals, banks’ asset values suf- investors, underwritten rights issue in the fering volatility in line with financial mar- market, and debt-for-equity exchange offer. kets, and investors still reeling from the “Our role required the whole firm to give mass cancellation of coupons and call big-picture overall advice, and to be the con- options on subordinated debt in 2009, it is a ductor and opine on how the different con- wonder that the bank capital market was stituent parts should interrelate, and then to The BPCE transaction re- alive at all in 2010. execute as part of a larger syndicate. To opened the European hybrid Nick Williams, head of EMEA equity deliver, you have to be up to speed on all the capital markets at this year’s winner, Credit product components,” says Mr Williams. Tier 1 market Sandeep Agarwal

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is that as the financial crisis unfolded, it cor- leading player in Germany, for example. rectly identified the key trends that would More importantly, the bank has trans- drive the bond markets and organised its lated a dialogue with the debt management debt business to address them. office into a strategic advisor relationship. It “We pulled together different content has advised the Irish government on the Spencer Lake, methodologies and built the organisation National Asset Management Association global head of around key themes. For example, we recog- and the French government on its strategic debt capital nised that the dislocated environment for investment fund. Similarly, in addition to markets and acquisition financial institutions would mean that there being the number one non-Greek primary finance, HSBC was a huge need for capital yet less access to dealer, it is advising the Greek government equity, so we built out our liability manage- on how to manage its financial holdings. ment and capital solutions practice around “We have moved from being a bond Most innovative investment that to ensure that we had all the right capa- house to being a valued financial advisor,” bank for Bonds bilities in one place.” says Mr Lake. “That’s been a conscious strat- Winner: HSBC Last year’s E300m PerpNC5 T1 for EFG egy for our capital markets business and has Shortlisted: BNP Paribas and Bank of Eurobank – which featured an HSBC- involved senior management at all levels America Merrill Lynch designed ‘contingent principal share settle- across all geographies.” ment’ mechanism – is evidence that this The quality that HSBC can boast above strategy quickly bore fruit. all others is a global footprint. Nowhere is The sovereigns, supranational and this more evident than in the UK bank’s agencies space, where HSBC is among the bond business. However, geography is leading houses in the world, was quickly equally matched by client coverage. In the identified as another key market segment. Local currency is a key past 12 months the bank has executed deals The bank has subsequently worked on inau- in every region and for every client group. gural deals for Portugal, Spain and the strength for HSBC. We According to Spencer Lake, global head European Investment Bank. It has also bring real innovation to of debt capital markets and acquisition deeply penetrated the local authority sector, finance, the main reason for HSBC’s success where it is now number one in Spain and a this space Spencer Lake

Most innovative investment replicated by Citi and other banks.” bank for Climate change and The Terra-Gen Alta Wind project, which sustainability is scheduled to deliver its first turbine in Winner: Citi October 2010, introduced the use of a lever- Shortlisted: Deutsche Bank and aged sale-leaseback structure for large-scale Standard Bank wind financing and was also the first 144A bond offering for a greenfield wind project. In 2007, Citi announced its intention to “This was an extremely well developed direct $50bn over 10 years to a wide- project with a very clean PPA. This was an ranging portfolio of internal projects and advantage when taking it to the capital external initiatives. Winning The Banker’s markets, which are hungry for investments Most Innovative Bank for Climate Change in renewables,” says Mr Sen. “However, this And Sustainability for the second year in a is still a new asset class so some education row is a sign that this strategy has been was required around the lease structure and hugely successful. the project itself.” Sectors such as energy The bank has completed some land- While Citi is bullish on the clean energy efficiency and storage mark deals. The AES Armenia Mountain and sustainable sectors, Mr Sen acknowl- wind project provided the first combined edges that the regulatory and political envi- could see the most dynamic financing package, through which the con- ronment is increasingly challenging. growth Sandip Sen struction and term loans and a tax equity “At a high level, the social and political investment were all fully committed at environment is supportive, but regulatory financial close; this significantly helped to and policy risk has increased dramatically. derisk the overall project. For example, in view of policy reviews in “This was a first-of-a-kind transaction, countries such as Spain, Italy and Germany, which was done at a time when there is growing uncertainty about support financing was difficult to come by,” for the solar energy industry,” he says. “But says Sandip Sen, Citi’s global head of we see big opportunities in other countries, alternative energy. “It has already been such as China, India and Australia.”

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Most innovative investment listen to what our clients want and what their bank for Commodities businesses need – and this leads to the right Winner: Morgan Stanley solutions, not product pushing,” says Mr Bryce. Shortlisted: JPMorgan and Credit Suisse Listening to clients has also provided the genesis of two of Morgan Stanley’s many Corporate treasurers are Having been in the commodities markets product innovations this year. In January, the for longer than most investment banks, Mor- bank traded the first ever container deriva- increasingly aware of how gan Stanley has built a business of more than tive, with Bocimar/Delphis and Clarksons. financial products can 350 people across 40 countries, with an envi- This enables clients to lock-in a future price able presence across both the physical and for a variety of worldwide routes, providing help them manage risk derivatives markets. If competition has better risk management for clients such as Colin Bryce recently been heating up – with rivals growing freight lines, freight forwarders, and shippers via aggressive organic growth and acquisition and retailers. – Morgan Stanley still commands this space. In March, the bank also traded the first It is the bank’s business model that has derivative (a forward freight agreement) helped Morgan Stanley to better understand linked to shipping iron ore along the key trad- the market, and to identify opportunities and ing route from India to China. For the first solutions for clients, says Colin Bryce, global time, ship owners or iron ore traders can co-head of commodities. “We have always hedge forward exposure on the India-China operated via a specialist model – with dedi- iron ore route, with significant risk manage- cated bankers in Norwegian power or Medi- ment benefits for hedging the components terranean jet fuel, for example, rather than needed to produce steel in China. derivatives generalists – which means that we “We have a large number of wet and dry know the underlying markets extremely well.” freight clients – on the physical and the That knowledge proffers tangible benefits paper side – and these products were a direct to clients, and is complemented by the quality result of talking to clients about the sort of of the dialogue with clients. “This business is risk management tools that they needed,” about transforming and transferring risk. We says Mr Bryce.

key to making the transaction a success,” dilution for the issuer and allows inves- says Frank Heitmann, head of convertible tors to buy the convertible bond with a origination, EMEA, at Credit Suisse. “We normal premium – is a technology that had local Taiwanese banks that were keen to we pioneered first in the US, then get exposure on the credit, and international brought to Europe, and are now apply- exchangeable bond investors who wanted ing to Asia,” says Mr Heitmann. Frank Heitmann, the bond but were keen to risk manage some If conditions have not recently been head of convertible of the credit exposure. The asset swap perfect for convertible bonds, Mr Heit- origination, EMEA, enabled us to bring both sides together.” mann is relatively upbeat about the Credit Suisse This deal encapsulates the key focus of future. “Investors want to put money to the Credit Suisse team: to balance the best use, but issuers have been sitting on the solutions for both issuers and investors, and sideline waiting for better valuations. Most innovative investment leverage a highly integrated global platform. With the pick up in M&A that we have bank for Equity linked “The convertible teams in the US, seen over the summer, and the wall of Winner: Credit Suisse Europe and Asia have worked together for refinancing coming after 2011, the signs Shortlisted: JPMorgan and Bank of about 10 years, and have been combined are pretty good for an uptick in activity.” America Merrill Lynch with derivatives and acquisition and corpo- rate finance,” says Mr Heitmann. “The whole In November 2009, Credit Suisse was the platform is well integrated with our sales sole bookrunner on a $207m exchangeable and trading team, because successful distri- bond for Taiwan-based microelectronic bution is crucial to achieving good terms for company UMC, utilising a swap of Unim- issuers and creating valuable opportunities crom and Novatek assets. Nothing unusual for investors.” f all the drivers come about that; except that it is a prime example Another Asian deal – last year’s $375m I of packaging an existing financial technol- convertible bond for Bum Resources – dem- together, I am positive ogy with a fresh idea to open a new market. onstrates Credit Suisse’s success in transfer- “Backing UMC’s dual-tranche ring know-how from one market to another. about the future pipeline exchangeable bond with an asset swap was “The call spread overlay – which minimises Frank Heitmann

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ness. But Credit Suisse had already pursued outsized, so we need the capabilities to syn- that model for some years, giving it a head dicate risk to larger hedge funds or other start in coping with the new environment, banks. Being well capitalised and very cog- which was rewarded by our judges. nisant of our risks, we are ready to deploy “We do not want to be everything to our capital against very good clients, and we Eric van Laer, everyone, but we want to be everything to expect to see more activity repackaging risk head of EMEA priority clients. And communication is key, for our institutional clients onto our balance equity derivative so that the whole bank understands what sheet, for us to manage it effectively,” says product management, our equity derivative capabilities are,” says Mr van Laer. Credit Suisse Eric van Laer, head of EMEA equity deriva- For hedge fund clients, the team also tive product management for Credit Suisse. devised knock-in forward variance swaps Those lines of communication extend to that allow cheaper entry to volatility trades Most innovative investment the bank’s shareholders, which include if the underlying spot price breaches an bank for Equity derivatives Qatar Holding. The Gulf sovereign-owned upside barrier. The product has traded the Winner: Credit Suisse investment vehicle became a client of the equivalent of $1.5bn notional equity since it Shortlisted: Société Générale and equity derivatives team for one of the most was launched in August 2009. Barclays Capital high-profile transactions of 2009: the 17% stake purchase in Volkswagen. The combination of ultra-low interest Credit Suisse provided an acquisition rates and high volatility has inhibited the facility to Qatar Holdings for its purchase of structuring of equity derivative pay-offs at the Volkswagen stake, which was structured attractive prices for retail investors over the as an equity derivative. The bank then man- We do not want to be past 18 months. This has obliged greater aged the large risk by purchasing credit everything to everyone, focus on designing bespoke solutions for default swaps from other market counter- corporate and institutional clients, leading parties. The coordination of product, client but we want to be to organisational reshuffles at some invest- and risk management units within the team everything to priority ment banks to integrate equity derivative was essential for transactions on this scale. teams more deeply with the rest of the busi- “Strategic deals of this sort tend to be clients Eric van Laer

solutions group, emphasises that the transac- exotics and hybrids trading at BarCap. tions are “bespoke rather than exotic”, a dis- Meanwhile, retail banks are facing con- tinction that underlines a strategy of meeting stricted margins as deposit rates are already at specific client objectives rather than pumping zero, but lending rates continue to tighten. out standardised products, while also remain- BarCap used one client’s own algorithm for set- ing transparent and liquid. ting its savings rate to provide the retail bank John Langley, Corporate clients are keen to lock in low with an exact savings deposit swap, monetising co-head of the global risk long-term fixed rates for borrowing, but with- market expectations of rising rates in the solutions group, out neglecting the high cost of carry relative to future to bolster the interest margin today. Barclays Capital short-term floating rates that are close to “Thanks to our strengths and capabilities zero. About E2bn in trades have closed in the in flow fixed income, even our most sophisti- past year using BarCap’s Atlantic Exceed cated clients trust us to be best placed to exe- Most innovative investment index, designed to monetise the term pre- cute without information filtering into the bank for Interest rate mium in the interest rate market through market. It is a strong selling point for all our derivatives euro and dollar futures. product range,” says Aurelia Lamorre-Cargill, Winner: Barclays Capital For a large European real estate client head of global rates structuring. Shortlisted: BNP Paribas and Royal looking to hedge its long-dated financing Bank of Scotland liabilities, Atlantic Exceed formed the basis of a 30-year swap with a premium cap of 3% Rock-bottom interest rates and uncer- and the possibility of a return of up to 1.4% for tainty about when they will change direction the client. are central themes for both corporate and “The Atlantic Exceed swap has an ele- Our strengths and financial institution clients at present. How- ment of complexity, but the structure is driven capabilities in flow fixed ever, Barclays Capital’s risk solutions group by euro and dollar short-term rates that are and rates distribution teams have tailored very observable and Libor and Euribor income... are a strong selling benchmark transactions for each of these cli- contracts that are very liquid even in difficult point for all our product ent groups in a way that won over the judges. market circumstances,” says Domenico John Langley, co-head of the global risk Azzolini, head of fixed income options, range Aurelia Lamorre-Cargill

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taken a leading position in addressing these Asmar says the best-received offerings today demands. The bank’s BARX-IS online multi- are those that allow investors to take a view on asset class trading platform provides second- an asset story such as commodities, or access ary market liquidity in structured products. to emerging markets. Meanwhile, the iPath exchange-traded notes But products that allow diversification or range also offers transparency, and lets indi- market-neutral positioning in uncertain times vidual investors take a view on asset classes are still desirable, and BarCap’s range of iPath Philippe El-Asmar, that would otherwise require derivative trad- volatility products, starting with VXX and global head of investor solutions, ing capabilities to access. VXZ that reference S&P500 volatility, have hit BarCap “The concept is answering to client the mark. The combination of the large former demand in a cost-efficient way, and listing is Lehman Brothers US volatility trading desk an important component of it. Creating more with BarCap’s distribution capabilities has Most innovative investment scalable, long-term solutions rather than spe- created a potential market benchmark, allow- bank for Retail structured cific structured products is probably the key ing individuals as well as institutional inves- products theme globally in the retail space,” says tors to take long or short volatility positions. Winner: Barclays Capital Philippe El-Asmar, global head of investor “On one day in May 2010, VXX traded Shortlisted: Société Générale and Royal solutions at BarCap. about 79 million units, making it one of the 10 Bank of Scotland The range of 22 structured notes listed most traded stocks or listed funds in the US,” since July 2009 on the Borsa Italiana is a good says Mr El-Asmar. Most entries in the retail structured example. Offering straightforward character- products category reflected three priorities istics such as floors, caps and inflation-linked among investors that providers are striving to returns, this was the first such product in the meet. These are simplicity, transparency and Italian market that allowed investors to buy liquidity. This is a major shift away from the without a distributor – meeting the cost-effi- heavily engineered pre-crisis products, which ciency criteria at the same time. The concept is answering proved opaque in their pay-offs and costly for Complex trades such as correlations on to client demand in a cost- clients to exit when times got tough. baskets of stocks, together with long product Barclays Capital (BarCap) appears to have maturities, are off the table for now. Mr El- efficient way Philippe El-Asmar

The brave decision is paying off, with the deals that have the quality to win the market’s bank winning this category for the second confidence – even with innovative underlying year running. There were no broadly distrib- assets. The US National Football League uted aircraft financings between November (NFL) established a facility for $835m 2007 and January 2009. Then, in the refer- allowing member clubs to borrow using secu- ence period for this award, Goldman led eight rity that included their television rights, held such structured deals – totalling more than in a lockbox by the collateral agent. To coor- Michael Millette, $4.3bn – and about 80% of all 2009 aircraft- dinate the NFL, clubs and the investor base co-head of securitisation, related issuance, often as sole bookrunner. required not just Goldman’s structuring Goldman Sachs “We kept our desks active, they continued skills, but its investment banking experience to have dialogue with clients, in many cases and relationships as well, says Mr Millette. working on restructuring if they were not Across the Atlantic, Goldman has contin- Most innovative investment doing new issuance, so we were well pre- ued to build on the momentum generated by bank for Structured finance pared to reopen the market in many sectors,” reopening the European commercial mort- Winner: Goldman Sachs says Michael Millette, co-head of securitisa- gage-backed securities market for UK Shortlisted: HSBC and Credit Suisse tion at Goldman. retailer Tesco, with two further deals for the And as investor appetite returns, the same client. The second brought in 21 new Balance sheets and reputations have both bank has successfully found and structured investor accounts, including a buyer for the been damaged by structured finance in the equity tranche, which had been retained by wake of the financial crisis, but it remains an the Tesco pension fund in the first deal. essential tool whose revival is keenly awaited “We have been the most front-footed by companies and banks alike. business among the banks, which means we Goldman Sachs kept faith with the busi- We kept our desks active, now have the most post-crisis experience in ness, and kept 16 separate structured finance the sector and a core team that we kept right teams at work during the crisis, in sectors rang- they continued to have through the crisis, which positions us well for ing from residential and commercial mortgage dialogue with clients an upturn in activity,” says Ben Green, head of securitisation, through auto and small busi- Goldman Sachs’s European structured ness loans, to aircraft leasing and media. Michael Millette finance team.

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Most innovative investment very well for current market conditions. bank for Initial public It decided early on what the shape of the offerings market would be in terms of offensive capi- Winner: JPMorgan tal raising versus defensive recapitalisa- Shortlisted: Goldman Sachs and Bank of tions, and makes sure that the bank only America Merrill Lynch brings to market the strongest and most relevant companies to guarantee support In a year when equity markets have been from investors. characterised by volatility, initial public A good example of JPMorgan’s offering (IPO) pricing perfection has been approach, says Mr Raghavan, is India’s hard to come by. A large number of deals Essar Energy. The $1.9bn IPO of this oil, have been pulled, and many have underper- gas and power company in April this year formed in the aftermarket. Of all the invest- gave investors access to a proxy for the ment banks, JPMorgan has the best track Indian growth story, but one that was News flow will continue to record: it has done more deals, with fewer framed in the context of a UK governance postponements than any of its competitors. framework and the comfort of a large liquid drive sentiment and activity The more deals undertaken, says Viswas offering. It also demonstrated JPMorgan’s for the next six to 12 Raghavan, head of international capital execution prowess. markets at JPMorgan, the better your per- “We priced this deal in one of the tough- months Viswas Raghavan formance should be. “The more transactions est quarters of the year,” says Mr Raghavan. you do, the greater your market intelligence “There was a banking inquisition unsettling and understanding of what investors want. markets in the US, volcanic ash completely In an environment that is swinging from disrupted the roadshow, sovereign crises rally to correction, picking your execution were gathering pace in Europe and we were window is critical. And that relies on having one week away from the UK elections, which the correct market intelligence. This then meant that markets in Europe were taking a feeds through to subsequent deals.” wait and see approach. Not the easiest back- He says the bank also positioned itself drop for a $1.9bn deal.”

Most innovative investment ness after the crisis. We asked ourselves: how bank for Loans and leveraged will we responsive to the current market? We finance were able to build our business for a new world Winner: : Bank of America and not be working from an outdated model.” Merrill Lynch The crucial element of this is the strong Shortlisted: Royal Bank of Scotland and coordination between product groups, which Credit Suisse interact on a regular basis. “This means we dis- seminate information across the business and Bank of America Merrill Lynch (BAML) really understand the dynamics between the truly is a behemoth in the loans and lever- different segments of the market and between aged finance markets. In terms of sheer vol- different client groups. This means we can be ume, it stands at the top of the global very thoughtful and clever about structuring syndicated loan market, the global leveraged and distribution,” says Ms Murphy. finance market and the investment grade This doesn’t mean that BAML does not bookrunner league tables. take advantage of its scale. Ms Murphy says We spent time rethinking Its business is not just one of scale, how- the bank does not target a particular sector ever. The offering for clients is characterised but has the resources and breadth to be able to and retooling the business by a creative approach to resolving client chal- cover all of them. This gives the bank particu- after the crisis AJ Murphy lenges, which has resulted in several notable lar advantages, particularly when the market deals. One such transaction was the $6.5bn is volatile. equity bridge to equity or debt securities for Another element that sets BAML aside is ness going forward. “The syndicated market is PPL, which enabled the mid-sized power the strength of its distribution platform. back for companies with the appropriate rat- company to acquire German utility E.On’s US “We have a large dedicated team of veteran ings, and there is more room for the invest- assets in a transformative deal. distribution people, who don’t trade – they ment grade loan market to run,” says Peter AJ Murphy, Americas head of leveraged solely focus on distribution of product. This Hall, global head of investment grade loans. loan capital markets, says that the bank’s cre- really enhances our ‘read’ on the market,” says “We expect to see a pickup in M&A activity ativity is born of BAML’s reorganisation: “We Ms Murphy. which will drive activity and we expect refi- spent time rethinking and retooling the busi- Overall, the bank is positive about busi- nancings to continue as well.”

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Islamic window HSBC Amanah, to redouble that would have made an outright sale and their efforts to find new financing tech- leaseback deal prohibitively expensive. Mean- niques for their clients. while, the International Finance Corporation “Since the AAOIFI guidelines, the chal- (IFC) turned to HSBC in the same month lenge is to come up with a transaction that is when it became the first non-Islamic supra- AAOIFI-compliant, so that you can market national to issue a sukuk. The deal should Mohammed it purely from the perspective of the credit build a long-term relationship, as HSBC can Dawood, director and pricing, not having the additional execu- help source some of the end-borrowers in of debt capital markets, HSBC tion risk of investors dwelling on the sharia- the Middle East and Asia seeking sharia- Amanah compliance aspects that can delay time to compliant financing from the IFC. closing,” says Mohammed Dawood, director “Issuers who are new to sukuk markets of debt capital markets for HSBC Amanah. and want to find out more now see HSBC as Most innovative investment HSBC dominates the market for major their first port of call. This is especially the bank for Islamic Finance corporate issuance in Saudi Arabia, where case for sovereigns, who also draw on our Winner: HSBC local investors are widely seen as among the expertise to help draft legislation to enable Shortlisted: Bank of London & Middle most demanding on sharia compliance. The Islamic finance, or to discuss structures that East and CIMB Islamic SR7bn ($1.9bn) issue for Saudi Electric Com- would be possible without legal amend- pany in May 2010 was the first time a sukuk ments,” says Mr Dawood. As global capital markets were buffeted used the leasing of intangible assets – such as over the past year, Islamic capital markets rights to read and maintain electricity meters also had to contend with internal chal- and distribute bills to customers. This sets a lenges. New guidelines on sukuk – sharia- precedent to allow other companies to issue compliant notes – issued by the Accounting sukuk without needing large tangible assets Issuers who are new to and Auditing Organisation for Islamic such as real estate to back the deal. Financial Institutions (AAOIFI) caused A $1bn Musataha (grant and leaseback) sukuk markets see HSBC structurers and investors alike to reconsider sukuk for Abu Dhabi’s Tourism Development as their first port of call their approach. All of which seems only to and Investment Company in October 2009 have encouraged HSBC, and its dedicated helped the client navigate a local legal system Mohammed Dawood

Most innovative investment China, we put in place a dedicated team to bank for Infrastructure and look at projects and structures,” says Mr project finance Gardner. “We hope this deal will be a tem - Winner: HSBC plate for China. It is a relatively small project Shortlisted: BNP Paribas and Société at 50 megawatts, but if we can get Chinese Générale Corporate & Investment Bank banks comfortable with such structures, we can scale it up.” According to David Gardner, global Other notable deals include: the first head of project finance and head of the soft mini-perm financing and portfolio resources and energy group at HSBC, what structure for concentrated solar power the bank tries to bring to the financing table assets for Acciona; the first Middle East deal is creativity. in which greenfield project financing was “We try not to be constrained by how proj- structured to include the option of raising ect finance is usually done, but to look financing through a project sukuk, for Saudi at new and better ways to structure financing Aramco; and the first listed green infra- HSBC’s approach is to for that particular project and region,” he says. structure trust in south-east Asia, for Kep- lead with advice and This approach is quickly visible in sev- pel Integrated Engineering in Singapore. eral of the deals executed by HSBC in the 12 The cornerstone of HSBC’s approach is follow with a full months of The Banker’s awards review its advisory-led strategy (advisory mandates package David Gardner period. For example, earlier this year, the outnumber arranging mandates by about bank was the sole structuring agent for AEI three to one) and its geographic focus on the NBT’s Rmb400m ($60m) non-recourse south-south corridor. project financing. This was the first such “We do not throw money at projects. We structure for a wind farm in China under the like to add value; to be cerebral. Then we fol- framework of the Renewable Energy law, low up with balance sheet where appropri- and the first time Bank of Communication ate,” says Mr Gardner. “We are not solely had participated in such a deal. focused on emerging markets, but it is defi- “Given the push for green energy in nitely where we can add most value.”

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firing on all cylinders. The Banker’s judges The bank has come up with some clever were particularly impressed with the inte- innovations. The structured finance equity grated nature of the platform and the capa- trading team has been set up to structure bility for bespoke solutions that this enables. solutions relating to financing difficult asset This was an explicit strategy laid out by classes, improve clients’ capital positions Sylvan Chackman, the bank, says Sylvan Chackman, co-head of and address barriers to investor access. co-head of global global markets financing and futures, the Another solution to catch the judges’ eye markets financing division which brings together the bank’s was the Multi Asset Calculator, which nets and futures, Bank of America Merrill swaps, futures and repo businesses with tra- risk across both listed and over-the-counter Lynch ditional cash prime brokerage, stock lend- products, and enables clients to calculate ing and capital introduction capabilities. leverage based on the risk exposure within “Post-crisis, we decided that would be their own portfolio. The ability to perform Most innovative investment able to better serve clients and get greater their own ‘what if’ scenarios to measure the bank for Prime brokerage economies of scale by bringing together all impact of specific trade ideas on their port- Winner: Bank of America the asset classes and products within our folio risk and margin requirements has Merrill Lynch financing businesses,” says Mr Chackman. proved a compelling offering for clients. It Shortlisted: Credit Suisse and Deutsche This was much more than just a re- was something that bankers had been work- Bank branding exercise, he says. “Integrating the ing on since 2007, says Mr Chackman. two banks gave us an opportunity to rethink “We began working on this when lever- In June 2008, Bank of America sold its the business and to create the organisation age was at its height. Since we rolled it prime brokerage business to BNP Paribas. that we think is the model for the future. out, we have got great traction. We don’t Just a few months later, it acquired another When we talk to clients, it’s about prime see any other prime broker with such a pow- prime brokerage platform with its acquisi- brokerage, financing and clearing solutions erful tool, so this is a real differentiator for tion of Merrill Lynch. Now, the business is across the spectrum.” us,” he says.

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Most innovative investment scheme. Jonathan Chesebrough, head of with our colleagues in liability management bank for Asset and liability risk and accounting advisor at RBS, says the and DCM, help design a programme over a management bank aimed to achieve the optimum mix of couple of years that is much more support- Winner: Royal Bank of fixed and floating rate debt and currencies ive of [BAT’s] strategic objectives and Scotland to support BAT’s key metrics such as earn- internal planning such as tax planning. So it Shortlisted: Credit Suisse and Société ings per share, all at an acceptable cost. is not an overnight solution, but something Générale Corporate & Investment “This wrapped together several groups we partner with BAT on an ongoing basis,” Banking within RBS. By seeing where BAT is today says Mr Chesebrough. and where it needs to go, we could then, RBS has also established itself as the For RBS, the work of asset and liabil- go-to bank for large-scale debt optimisation ity management (ALM) is spread across at transactions in the UK retail sector, with a least three practices: the liability manage- modified Dutch auction that allowed Marks ment team that works in the debt capital & Spencer to refinance £225m ($350m) in markets (DCM) business, the risk advisory 2011 and 2012 bonds for a new 2019 issue in team, and the insurance and pension ALM November 2009. The floor-only spread- group. Central to the success of these three [The BAT deal] wrapped based auction technology was then used for practices is the ability to work together to together several groups Tesco’s £920m buy-back across five sterling produce extensive transactions that and four euro issues in June 2010 – one of improve clients’ exposure to a wide range of within RBS. By seeing where the largest investment grade tender offers risks, often simultaneously. BAT is today and where it in Europe to date. A process of risk analysis followed by a “The difference in the Tesco transaction E600m swap hedge and credit auction needs to go, we could then was that there was no new issuance. It transaction for British American Tobacco help design a programme wanted to take advantage of existing mar- (BAT) characterised this approach, aiming ket conditions to reduce net debt using cash to optimise the group’s financial position that is more supportive of on balance sheet and achieve a stated objec- across variables including exchange rates BAT’s strategic objectives tive to reduce leverage at group level,” says and interest rates, taking into account not Gianmarco Deiana of the RBS liability only its debt profile, but also its pension Jonathan Chesebrough management team.

ers in Europe, rather than borrowing and With IMO Carwash, mezzanine lenders “respraying” bankers from other parts of its contested being written out of the capital corporate finance business. structure. The court asked Rothschild to turn “Because we are specialists, we are inter- expert witness on tranche valuations, and the ested in technology, in the next frontier, iden- bank’s testimony was accepted by the judge. tifying what has not yet been done in Meanwhile, existing relations in Russia Andrew Merrett, restructuring, figuring out how we can make it helped Rothschild navigate the $13.8bn co-head of work,” says Mr Merrett. restructuring of metals giant Rusal, which European restructuring, New developments introduced by Roths- included 12 syndicated and 42 bilateral loan Rothschild child included advising Oaktree Capital Man- facilities. Mr Merrett says achieving creditor agement on its investment in packaging firm cohesion was essential, to avoid each lender SGD Group, the first new money restructur- seeking to claim security pledged by one of the Most innovative investment ing since France’s recent ‘sauvegarde’ law. And 17 different Rusal borrowing entities. bank for Restructuring the dedicated team has gained momentum as “We do not know yet if it will set a prece- Winner: Rothschild it gains expertise. For two groundbreaking dent for other restructurings, but it has cer- Shortlisted: Lazard and Goldman Sachs deals in the past 12 months, Rothschild was tainly created a useful shorthand for able to draw on the experience and techniques co-operation among creditors whenever we As the wave of restructuring in structured developed in previous years. negotiate with Russian banks in the future,” investment vehicles (SIVs) abates, The Banker For the £435m ($680m) restructuring of says Mr Merrett. has recombined the securities and corporate IMO Carwash, the bank used a UK court- restructuring categories back into a single approved Scheme of Arrangement and pre- award. What has not changed is the strength packaged administration model, which it had of the franchise at Rothschild, a winner for the pioneered with retirement home developer second year running. Andrew Merrett, co- McCarthy & Stone. The aim of a legally head of European restructuring at Rothschild, approved process is to overcome the problem Because we are specialists... attributes this success in part to the bank’s of ever-larger pools of creditors holding differ- we are interested in the next decision even before the financial crisis to ent tranches, which can otherwise make it retain a team of dedicated restructuring bank- impossible to reach a deal. frontier Andrew Merrett

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bank of choice for structured solutions. strike when they needed it, settle as funds Our ability to originate these transactions flow occurred, and avoided leaving them is facilitated by our institutional client with any market risk if the deal did not go and corporate coverage teams, which through” says Wes Price, head of strategic are among the strongest on the Street,” FX structuring in Europe. says Deutsche’s global head of structuring The bank’s network and knowledge Ram Nayak. in structured credit markets were essential Ram Nayak, A dedicated mergers and acquisitions in the unwind of an illiquid $10bn col­ global head of structuring, advisory team within the foreign exchange lateralised debt obligation (CDO) position Deutsche Bank business characterises this specialised for another bank, and the sale of $6bn in approach. The team recently advised a mortgage-backed securities for monoline European company buying an Australian insurer Syncora as part of its restructuring Most innovative investment target in US dollars. deal. And in the rates business, Deutsche bank for Risk management Selling shareholders wanted compensa- Bank doubled the size of the longevity Winner: Deutsche Bank tion if the Australian dollar strengthened by hedging market for European pension Shortlisted: BNP Paribas and HSBC more than 5% between signing and funds funds, with a $3bn hedge for the BMW pen- flow. The buyer wanted a suitable US sion scheme. A global structuring team with a dollar/Australian dollar hedge, but signing “Our major innovation was that, instead matrix of regional and product lines and closing dates were both uncertain, of taking on all the risk unhedged, we mirroring the global markets business there was a possibility that the deal could syndicated the majority of the trade in itself gives Deutsche Bank an edge in still fall through, and at $3bn, the trans­ many formats to traditional bank counter- helping clients manage risks across vari- action was large enough to move the parties, reinsurers, and through our ables. Added to that, the bank retained options market against the buyer once the UK-regulated insurance subsidiary Abbey trading networks in complex products such deal was announced. Life. We can now see two-way trading in as correlation and illiquid credit through- “We needed to make sure that the trade the risk that we syndicated, giving us the out the crisis. was flexible at the front end, that we gave capacity to take on more,” says David Hins- “For any event-driven business that has the client a known price for a 5% out-of- ley, head of interest rate structuring at complexity across the spectrum, we are the the-money hedge, allowed them to set the Deutsche Bank.

Most innovative investment bank to be able to offer clients options bank for Foreign Exchange on swap points, enabling them to better Winner: BNP Paribas manage the swap point risk inherent in Shortlisted: Royal Bank of Scotland and forward FX. It has tools that let clients Barclays Capital price their own multi-currency and FX hybrid options. Already the largest traded market in BNP Paribas also excels in local curren- James Davison, the world, daily foreign exchange (FX) vol- cies. It was the first to offer range accrual on head of FX structuring for umes have now reached $4000bn, an a currency basket in the Turkish market for EMEA, BNP $800bn rise in three years. The huge a mutual fund client looking for a currency- Paribas increase in spot volumes – up 50% to linked product that would provide a yield $1500bn per day since the most recent BIS enhancement over the risk-free deposit rate survey – confirm that this is a volume- in new Turkish lira. For a Chinese client Paribas’ head of FX structuring for EMEA. driven business. looking for a low-cost strategy to hedge its He says the bank has invested heavily in But that is not the whole story. Now dollar and euro receivables against an growing its sales and trading headcount, more than ever, corporates, financial insti- appreciating renminbi, the bank came up and in developing its electronic trading tutions and investors are looking for clever with a lock-in dual currency forward. This platform. It has already rolled out a new FX ideas. Faced with an uncertain economic is the first onshore trade of its kind and and interest rate derivative trading plat- environment and volatile markets, clients complies with onshore regulations that do form to private and retail bank clients in are looking for hedging solutions or manag- not allow renminbi options. Asia and Europe, and is also rapidly ing asset/liability challenges; they want the Now, however, the bank has bigger ambi- expanding its prime brokerage offering. ability to trade FX volatility as an asset tions. “We have always had a strong deriva- But constructing bespoke solutions will class, or the tools to help them identify tives culture and have therefore always been remain a key pillar of the client proposition, other trading opportunities. a leading player in the structured space; but says Mr Davison. “In the post-crisis era, The winner of this year’s award for FX we have spent the past two years or so build- there is even more focus on solutions, rather – BNP Paribas – has a strong derivatives ing out a much more complete FX platform. than products. Clients are looking for ways culture, which has helped it to stand out in Our ambition is to be a top five FX provider to manage exposures in a dynamic but less terms of bespoke solutions. It was the first globally by 2012,” says James Davison, BNP leveraged way.”

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completed global M&A, and has advised on against Xstrata and biotech firm Genzyme 10 of the 20 largest transactions over the on its proxy fight against Carl Icahn. past 12 months, excluding government res- Perhaps the most iconic battle, at least cues. It has advised on most of the signifi- for those in the UK, was Goldman’s role in cant leveraged buy-outs, on many of the helping UK confectionary firm Cadbury most complex cross-border and emerging negotiate a better deal for shareholders market transactions, as well as restructur- during Kraft’s hostile bid. Mr Dyal says that Gordon Dyal, ings and squeeze-outs. the deal was a difficult one for a variety global head of M&A, Goldman This does not mean that Goldman is of reasons. Sachs complacent about the effect of negative “It was a very challenging transaction, publicity. Gordon Dyal, global head of not least because it was a contested deal M&A, says it is hard to tell what was the that was played out so vividly in the UK Most innovative investment effect on clients, the firm just keeps doing press. This amplified all the challenges that bank for Mergers and what it does best. you usually face with a large cross-border Acquisitions “You never know which new clients deal. Ultimately, we are judged by our cli- Winner: Goldman Sachs didn’t call. Would we have chosen to work ents, and we are pleased that they believe Shortlisted: Credit Suisse and Morgan in a different environment? Of course. But we achieved a very good deal for their share- Stanley we are very proud of where our M&A busi- holders. And that’s our job.” ness is, and that is built on establishing In terms of the future pipeline, Mr Dyal If competitors hoped that the investi- trusted relationships and advising on what says the bank does not try to second guess gation by the US’s Securities & Exchanges is best for our client to do or not do – includ- the market, but does position its business to Commission and other attacks on the firm ing not doing the transaction.” try to anticipate trends. In that respect, he would cramp Goldman Sachs’ mergers Traditionally known as a leading practi- says emerging markets will clearly be a and acquisitions (M&A) style, they were tioner of raid defence, the past 12 months focus going forward. “If BRICS are going to wrong. Despite fighting to save its reputa- have been no exception. Goldman has continue to grow – as we believe – then it tion, Goldman has continued to dominate advised on some of the largest hostile and will make sense for us to continue to weight the industry. unsolicited bids, including advising mining our resources to the regions and industries The bank ranks top in announced and group Anglo American on its defence that need them.”

Inflation swaps are credit risk-heavy in the gains while keeping hedges in place. because they traditionally have a significant What stands out across its trades is RBS’s back-ended inflation risk, payable at matu- impressive depth of market engagement. This rity. RBS devised three types of ‘pay-as-you- also allowed the bank to match up Danish go’ inflation swap for UK utilities company developer Great Belt, which was looking to Southern Water, to reduce the unpaid portion replace inflation-linked debt with inflation of inflation indexation at any given time, bet- swaps, to a Danish pension fund that no lon- Christian ter managing the risk characteristics of the ger regarded pan-euro inflation swaps as an Alibert, head of structured deal. This allowed RBS to increase its trading adequate hedge for its domestic liabilities. inflation, RBS with Southern Water without hitting expo- “The non-core European inflation indi- sure limits, and the bank was able to reduce ces have struggled in the past couple of the initial coupon on the swaps in return. years because banks were reluctant to ware- Most innovative investment “We went through a number of iterations house this illiquid risk, so the challenge to bank for Inflation products to finalise the trade, and it is testament to our get these markets moving again was to get Winner: Royal Bank of collegiate system that we worked across the deep into the participants and identify Scotland trading, structuring and sales functions and where the supply and demand for these Shortlisted: HSBC and BNP Paribas utilities coverage team to find a holistic solu- indices come from,” says Christian Alibert, tion, to control the risk for the client and for head of structured inflation. The repricing of credit risk had two sig- ourselves in terms of complex inflation and nificant impacts on the market for inflation rates correlation,” says Richard Kingsbury, derivatives, both of which inspired Royal director of structured risk solutions at RBS. Bank of Scotland (RBS) to generate novel To help the UK pension scheme of Sun responses. The first is the problem of coun- Life of Canada address basis spread risk, RBS We went through a number terparty credit risk on inflation products, in devised the first trade to lock in the spread a market where most transactions are long- between index-linked gilts and inflation of iterations to finalise the dated. The second is that the basis spread swaps. The scheme had made gains because [Southern Water] trade between inflation-linked bonds and infla- the swaps it used as hedges outperformed tion swaps became highly volatile. index-linked gilts, and now wanted to lock Richard Kingsbury

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