Best Domestic Commercial Bank: National Australia Bank (NAB)
There is only one bank of choice for many Australian companies: National Australia Bank. NAB, AustraliaÆs largest bank by assets, is one of the industryÆs strongest performers. It posted a 12% rise in operating profit to A$2.82 billion ($1.6 billion) for the year ended 30 September 1999.
Analysts mainly attribute NABÆs success to its sharp business strategy and large range of products and services. But they also cite its geographic diversification and international spread, as well as its focus on e-commerce.
One of the bankÆs most successful strategies has been to reduce dependency on interest income and develop diversified income streams, say analysts. For example, NAB now earns more income from non-interest sources, such as fees from mortgage servicing in the US, treasury income and fees from marketing of a range of financial services products.
The bank has a strong brand name, boasts the most varied consumer loan products among local banks, and is an innovative force in internet banking.
NABÆs e-commerce strategy has three elements: intranet, internet and business-to-business commerce. It also has expanded through overseas acquisitions, such as that of HomeSide International, one of the largest mortgage servicers in the US. The bankÆs overseas purchases have added revenue, profits and synergy. The bank already earns 50% of its income outside Australia, with assets in the US, Asia, the United Kingdom, Ireland and New Zealand.
The combination of a multinational customer base, growing e-commerce capability and globalization of operations will spur the bankÆs growth, analysts say.
The bankÆs diversified products, which include loan, investment and fund management products, cater to a wide market, such as farmers, local governments, students and young professionals. Its National Online Business, for example, allows a company to transfer funds between accounts, pay salaries and invoices, and conduct other banking transactions anywhere, anytime in Australia.
Best Domestic Securities House/Investment Bank: JB Were
Ask analysts to come up with a word that best describes JB Were and they will probably say æcomprehensiveÆ. JB Were, AustraliaÆs largest independently owned brokerage, boasts an impressive breadth of coverage and research capability. It researches and monitors more than 250 stocks in the Australian equity market, covering 95% of the marketÆs capitalization. Some 40 analysts cover Australian stocks and seven focus on international business and commodity trends as they relate to Australian companies.
ôFew firms can beat JB in terms of the large range of products and services,ö says one Melbourne analyst. Aside from stockbroking, JB Were provides capital market and investment management services. JB Were Asset Management offers unit trusts and a range of wholesale, corporate and institutional portfolios. JB Were also offers a wide range of free services, including investment consultations, superannuation and retirement advice, investment plans, newsletters, economic industry sector and company research, investment seminars and standard portfolio reports.
JB Were, which opened in Melbourne more than 150 years ago, specializes in Australian and New Zealand equities. It has a range of products in cash management, custodian services, equity finance and managed funds. It became the first Australian broking firm to go overseas when it opened a London office in 1928. To keep pace with globalization, the group opened an office in Tokyo in 1989, followed by more openings in Auckland, Wellington and Christchurch in 1992.
One analyst says he likes the JB Were philosophy: ôThe firm bases its investment advice on research; it values long-term relationships with clients. It does not focus on a sales-driven, short-term relationship.ö
Best Foreign Commercial Bank: Citibank
The breadth and depth of CitibankÆs reach in Australia has made the bank a household name in the country. Citibank Australia offers a wide range of products and services, and a combination of global reach and local knowledge, serving retail as well as corporate customers. Its operations encompass corporate and investment banking, consumer banking and asset management. The bank serves more than half a million consumers and 800 corporate and investment bank customers.
ôCitibank is a very high-profile bank in Australia,ö observes one Sydney-based analyst. ôIt must be one of the best-known, if not the best-known, foreign banks in the country. ThatÆs good for a consumer bank.ö
Last year, the bank completed a large number of transactions in a wide range of areas, including:
Institutional banking: major relationship banker to more than 30 Australian-based global corporate customers and lead banker for some 150 multinational companies operating in Australia. It gained 85 new customers;
Project finance: lead arranger/co-arranger on six transactions raising total A$4,433 billion;
Global loan products: closed $2.44 million global loan product deals in 1999; $2 million deals closed or are in the market in the year to date.
One thing is certain, Citibank is the house to beat and is helping to lead the way in consumer banking.
Best Foreign Securities House/Investment Bank: Salomon Smith Barney
Salomon Smith Barney is one of the most admired investment banks in Australia, by virtue of its impressive transaction track record and strong institutional, corporate and retail client bases. It provides clients with a wide range of products and services in equities, fixed income and investment banking as well as research. The firm has built strong positions in primary and secondary markets, through a combination of local expertise and global might.
Salomon Smith Barney maintains major offices in the key financial centres of Sydney and Melbourne. Its Private Client Stockbroking division has offices in all major cities including Sydney, Melbourne, Brisbane, Gold Coast, Adelaide and Perth.
ôSalomon has a very good brand name in Australia. Many companies admire the bank and are in awe of its reputation,ö says one Melbourne-based analyst.
In the past year, Salomon Smith Barney has served as financial adviser to 26 major transactions in Australia and New Zealand, for a total value of $5.6 billion.
The key debt deals were:
National Australia Bank, Yankee offering (largest-ever debt issue priced by Australian corporate in any fixed income market), $900 million, 8.6%, due 2010, $700 million, 10-year non-call for five (10NC5), floating-rate note (FRN).
Commonwealth Bank of Australia, Yankee offering, $300 million, 8.5%, due 2010, $450 million 10NC5 FRN.
Telecom New Zealand, Euroyen offering, (first Euroyen by an international telecom), Y20 billion, 1.85%, due 2007.
ETSA Utilities, A$1.6 billion, domestic issue (largest-ever Australian dollar bond issue), triple-A wrap: A$350 million FRN, due 2007, triple-A wrap; A$750 million FRN, due 2010, senior; A$275 million, 7.5%, due 2005; senior: A$225 million FRN, due 2005.
Telecom New Zealand, euro currency, Euro offering, E400 million, 5.5%, due 2005.
FosterÆs Brewing Group, euro currency, Euro Offering, E300 million, 5.75%, due 2005.
GE Capital, Australian dollar, domestic issue, (first Australian dollar deal in 2000), A$300 million, 7%, due 2002.
The key equity deals were:
ERG Ltd, convertible note, A$250 million, lead manager.
Neverfail, block trade, A$63 million, sole lead manager.
IBA Technologies, IPO, A$70 million, joint lead manager.
The key M&A deals were:
A$3.4 billion acquisition of ETSA Utilities and ETSA Power by Hongkong Electric and Cheung Kong Infrastructure û SSB acted as financial adviser to Hongkong Electric and Cheung Kong Infrastructure.
A$295 million acquisition of Optima Energy by TXU Australia û SSB acted as financial adviser to TXU Australia.
A$92 million takeover offer by San Miguel for J. Boag & Sons û SSB advised J. Boag & Sons.
A$395 million takeover offer by Illinois Tool Works for Siddons Ramset û SSB advised Illinois Tool Works.
A$143 million takeover offer by Jupiters for AWA û SSB adviser to Jupiters.