Monday, July 14, 2008

League Tables • H1 / Q2 2008

The Globe and Mail, Boyd Erman, 14 July 2008

Royal Bank of Canada's securities division raised the most money of any firm selling Canadian stocks and bonds in the second quarter, dominating a sleepy three months as roller-coaster markets kept investors and issuers largely on the sidelines.

The bank's RBC Dominion Securities Inc. division topped market share rankings for stock sales in the quarter, helping to lead about a fifth of all sales by value, thanks to a run of relatively small deals, according to rankings prepared by information services firm Thomson Reuters. RBC also led in bond sales.

The slow times in April, May and June came on the heels of a quiet first quarter. So far this year, the overall amount of new stock sold in Canada has slumped by about 38 per cent, to $17-billion, compared with the same period last year. Companies are nervous about selling stock into such tumultuous markets, as banks and other financial companies continue to struggle, bankers said, and without some stability in global share prices it's hard to forecast when the doldrums will end.

"There's a number of issuers we're in discussions with and we know are likely to want to come to market; it's just they would prefer to do it when there's a bit better tone," said Doug McGregor, co-president of RBC Dominion.

"If you can get the financials back on their feet, that would be, I think, a step in the right direction."

RBC's winning quarter in the equity rankings helped it narrow the gap with Canadian Imperial Bank of Commerce's CIBC World Markets Inc., which leads the year-to-date Thomson Reuters rankings.

CIBC's position at the top of the stock sales table for the first half is controversial in the securities industry because the firm's biggest deal was a $3-billion equity offering for its parent bank.

While such "self-led" deals count in Thomson rankings, critics say self-led deals don't generate any real profit for an investment bank or demonstrate an ability to win business. However, self-led deals have been common around the globe as banks have been busy recapitalizing by raising money in markets.

In Canada, other than the big CIBC stock sale, most of bank fundraising has taken place in the debt and preferred-share markets, giving them a boost.

If markets don't get back on their feet soon, look for more investment banks to trim staff in Canada to compensate for slumping revenue, as CIBC World Markets and Bank of Montreal's BMO Nesbitt Burns Inc. have already done.

"I don't think the cuts will be really dramatic," Mr. McGregor said. "There will be some attrition; there will be some cuts - but I don't think it's going to match what's going to happen in New York."