It's A Deal

December 21, 2007

League Tables Aren't That Important

There’s more talk Friday of a big Wall Street bank selling a piece of itself to a foreign state-owned company. The Wall Street Journal and the Financial Times both report that Merrill may be next in line, in this case getting a $5 billion infusion from Singapore’s Temasek.

Merrill wouldn’t comment on the reports, but separately, the FT raised an interesting point about one advantage of all these deals to sovereign wealth funds: it could be really good for the banks’ league-table rankings.

“The banks, battered by subprime woes, have gone to sovereign wealth funds to bolster their balance sheets. In fact, the recapitalization deals will count towards M&A league table activity as each bank can claim credit for 'advising' itself in the 'deal,'" the FT writes.
 
There’s been no shortage of these SWF deals. UBS is selling a 9% stake to Singapore via the Government of Singapore Investment Corporation (GIC), which will become the bank’s largest holder. The move comes on the heels of the Abu Dhabi Investment Authority’s (ADIA) deal, announced in late November, to pay $7.5 billion for a 4.9% stake in Citigroup. UBS is also unloading another 1.5% stake to an undisclosed Middle East investor, and Morgan Stanley recently said it will receive a $5 billion infusion from China Investment Corp.
 
It’s safe to say the league tables aren’t first and foremost on the minds of the big banks as they unload stakes to foreign investors, but it’s a nice little perk.