Competition. It's the defining characteristic of the capital markets. Most industries and markets are competitive, of course. But the effort — the extraordinary amounts of time, the hard graft and the sheer brainpower — that is put into competition in this financial sector has little by way of comparison.
Add to that, the number of players competing for the same business and one catches a glimpse of why the intensity of competition is almost unique.
And then there is the risk.
For investment banks and most other capital markets players there are few certainties when it comes to revenues. Contractual revenues that can be relied on year after year are few and far between.
Moreover, new business is notoriously difficult to come by — as capital raisers and investors know only too well, there is nearly always another firm they could deal with.
So business is won competitively — whether it is by a snap price decision over the phone, a number on a screen or, in a much more intensive way, by a whole team working for months to win a mandate that will earn them millions if they succeed, but could equally likely go to a rival.
This Celebration of Excellence is about that competition.
In each of the major markets we cover, EuroWeek has chosen a Champion — the current leader in that market. Wherever possible this is the top ranked bank in the Dealogic league table from the beginning of 2005 to the end of April this year.
Yes, league table performance may tell only part of the story behind the Champion. But that said, it is hard to argue that the league table leader in any market does not deserve to be considered among the very best in its field. If not the best.
However, no Champion can sleep easy at night. Close behind are Challengers, eager to claim the market leadership for themselves.
EuroWeek has profiled one Challenger in each market. Often this is the second placed bank in the league table, but always it is one that has either a strong chance of unseating the Champion or, in cases where the Champion is far ahead, a better chance than any of its rivals.
Finally, we have selected One to Watch in each market. Some of these are close challengers for the championship; others are further off the leadership but have strong upward momentum. In every case, there are interesting things about the bank and its team that make it capable of great things.
Naturally, we have had to leave out many deserving banks, also excellent in their fields, which have done many innovative and successful deals. In the same way, many excellent banks are left out every time a trade is made or a mandate is given.
What we are confident of, however, is that every bank we have profiled has thoroughly deserved it — that much should be obvious from their track record and from the accounts we have given of them.
Interspersed among the profiles, one in each section, are five feature articles. Each of these examines, in a different way, the tone of competition in that market. The themes they deal with are those of pressing interest to any professional in the capital markets.
Is balance sheet brawn worth more than brain? Is fee compression in investment banking going to drive out the smaller players? Are there any innovative products left to create? Do relationships count for anything? Where is the next big thing? And must banks take on ever greater risk in the search for profits?
Whether you work in the bond, loan, MTN, structured finance or equity markets, as a principal or intermediary, we hope our Celebration of Excellence casts some interesting light on the changing competitive landscape around you.
Toby Fildes Jon Hay
Managing editor Editor
|Celebration of excellence league tables|
|Champion||Challenger||One to Watch|
|Royal Bank of Scotland||2||3|
|Royal Bank of Canada||1|
|Daiwa Securities SMBC||1|
|Dresdner Kleinwort Wasserstein||1|
|Celebration of excellence league tables|
|Ranking on points (3 for Champion, 2 for Challenger, I for One to Watch)|
|5||Royal Bank of Scotland||9|
|Royal Bank of Canada|
|23=||Daiwa Securities SMBC||1|
|Note: Information in the profiles that follow on banks' 'Key clients' and 'Best deals' is chosen by EuroWeek, not the banks concerned.|