Author: Gordon Platt
Annual Survey: Investment Banks
Best investment banks

The biggest wave of mergers and acquisitions since 2000 and record worldwide underwriting of securities are producing strong gains in revenue and earnings at the leading investment banks. The banks also are making hefty trading profits in global stock and bond markets, as well as commodities, thanks to favorable market conditions in an expanding global economy. Bankers say they realize that the good times won’t last forever, but so far there has been no sign of a slowdown.
Worldwide underwriting of debt, equity and equity-related securities increased for the third consecutive year in 2005, reaching a record $6.5 trillion, according to Thomson Financial. Meanwhile, global M&A; activity continued to climb in the first quarter of 2006, with a gain of nearly 45% in announced deals from the same period a year earlier.
Much of the capital-raising activity has come from companies based in Asia. Last October China Construction Bank launched the world’s biggest initial public offering of 2005, valued at $9.2 billion. Other big Chinese banks are waiting in the wings, together with Russian energy companies and Brazilian and Indian corporations eager to raise capital to expand in their fast-growing economies.

Energy and power was the leading sector for worldwide M&A; transactions in the first quarter, with a 332% increase from the first quarter of 2005. Telecommunications was second, with AT&T;’s $89.4 billion acquisition of BellSouth accounting for more than half of the proceeds in the sector.

Global Finance’s editors, with input from industry analysts, corporate executives and banking consultants, identified the best investment banks in the world. We considered deals announced or completed in the last three quarters of 2005 or the first quarter of 2006. Our criteria included market share, customer service and advice, deal-structuring capabilities, distribution network and staff dedicated to investment banking. We also considered efforts to overcome difficult market conditions, innovation, competitive pricing and after-market performance of underwritten securities. The best banks were not necessarily the biggest but rather the best—the ones that major corporations worldwide should consider to handle their investment banking needs.

Gordon Platt

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