BEST INVESTMENT BANKS

Global Finance, Jun 2005 by Platt, Gordon, Hawser, Anita, Green, Paula L

It's been a busy year for the world's investment banks as they have vied with each other to win a greater slice of an ever-growing pie.

From Google's Internet auction-style initial public offering to the rise of private-equity censortiums, investment bankers have lived in interesting times in the past 12 months. Financial market conditions have worsened in the past two months, and the year ahead promises to be at least as challenging as the last. Worldwide merger-and-acquisition transactions exceeded $1.9 trillion in 2004, the highest in four years, with Goldman Sachs leading all financial advisers. Merger activity continued at an active pace in the first quarter of 2005, highlighted by Procter & Gamble's $57.5 billion acquisition of Gillette, creating the world's biggest consumer products company.

Meanwhile, global underwriting volume rose to a record $5.7 trillion last year, and IPO volume more than doubled to $135 billion, according to a Thomson Financial. Issuance of global debt, equity and equity-related securities totaled $1.6 trillion in the first quarter of 2005. While that was a decline of 5.2% from the year-earlier period, it was still the second-best quarterly showing ever for securities underwriting. With companies "worldwide seeking to raise huge amounts of capital at a time when major market averages are declining, the selection of a capable investment-banking partner has become critical.

Global Finance editors, with input from industry analysts, corporate exectti tives and banking consultants, identified the best investment banks in the world. We considered deals announced or completed in the last three quarters of 2004 or the first quarter of 2005. Award winners were chosen for best equity, debt, M&A and overall in six regions and globally. Country winners were selected m 23 nations. Industry-sector winners were chosen in 10 sectors. Best equity, debt and M&A deals were also selected, and best legal advisers were named globally and in six regions.

Goldman Sachs was singled out as Best Investment Bank globally. The firm tied with Citigroup and Morgan Stanley for the most individual awards; each won six. UBS won five awards, and JPMorgan Chase and Merrill Lynch followed with four awards each.

Criteria included market share, eustomer service and advice, structuring capabilities, distribution network, staff dedicated to investment banking, efforts to overcome difficult market conditions, innovation, pricing and after-market performance of underwritings.

The winners are the banks that the best companies choose to get their financings done.

-By Gordon Platt, Anita Hawser and Paula L. Green

GLOBAL AWARDS

INVESTMENT BANK

Goldman Sachs

By steering clear of the governance scandals and internal bickering that befell many of its competitors and consistently putting together the biggest corporate mergers and acquisitions worldwide, Goldman Sachs has demonstrated that it deserves to be named best investment bank globally for 2005. Not only did Goldman Sachs top the league tables as the leading financial adviser for announced worldwide M&A deals in the past 12 months, but it also maintained its reputation for service and integrity. The old-line firm, which was founded in 1869 and went public in 1999, provides financial advice and services to the world's leading companies. It has been the top global M&A bank for each of the past seven years.

In its fiscal first quarter ended February 25, 2005, Goldman Sachs earned a record $1.5 billion.The annualized return on average tangible shareholders' equity was 29.6%. Net revenues in investment banking were $893 million, 17% higher than the first quarter of 2004. As of February 25 its total capital was $121.7 billion, comprising $26.1 billion in shareholders' equity and $95.6 billion in long-term debt.

EQUITY BANK

Merrill Lynch

Merrill Lynch was the top-ranked bookrunner for global equity and equity-related issues during the first quarter of 2005, raising $12 billion in proceeds, according to Thomson Financial. Merrill Lynch also served as bookrunner on five of the top 10 initial public offerings worldwide in the first quarter.

With a presence in 28 countries, the firm's investment bank has raised $3 trillion in debt and equity for clients worldwide in the past 10 years. Merrill Lynch is also one of the world's largest managers of financial assets, with $479 billion under management.

Merrill Lynch earned $1.2 billion in the first quarter of 2005, which was down 3% from the record $1.25 billion in the first quarter of 2004. Net revenues from global markets and investment banking rose 3% from the year-earlier quarter and were up 13% from the fourth quarter of 2004. The global equity markets division generated its strongest net revenues in the past 15 quarters.

DEBT BANK

Citigroup

Citigroup was the leading underwriter of global bonds, global high-yield debt and global investment-grade corporate debt in the first quarter of 2005, according to Thomson Financial. Citigroup retained the top position in US investment-grade corporate debt for the 20th consecutive quarter.