If the Euro Crisis Has Losers, Someone Has to Win

Focus: GLOBAL

Jim Jubak Image Jim Jubak Founder and Editor, JubakPicks.com

Winners from the euro debt crisis?

Well, sure. Just take a look in the banking sector. Most of the attention has focused on the losers in the crisis—the European banks that are reducing their lending, selling assets, and exiting entire markets in an effort to reduce assets and increase capital ratios to the 9% required by suddenly vigilant European banking regulators.

But if somebody is exiting a market, it’s likely that someone is entering. And if somebody is selling assets, somebody has to be buying.

For example, for the first 11 months of the year, Banco Itau—the investment banking arm of Brazil’s Itau Unibanco (ITUB)—has taken over the top spot in Brazil for merger advice, equity underwriting, and initial offerings.

What banks used to have those spots? Rothschild for merger advice, Citigroup (C) for equity underwriting, and Crédit Suisse for IPOs. Banco Itau advised on 27 deals (worth $35.4 billion), including the biggest deal of the year, the $17.3 billion merger of two units of Telemar Participacoes.

Having less competition from developed-market banks is a very good thing in a market that’s down in size overall in 2011. Investment banking fees in Brazil fell this year to $783 million for the year through November, from $1.2 billion in 2010, according to Dealogic. But by jumping up in the rankings, Banco Itau saw its investment banking fees grow.

In Asia, a similar process is at work. Commerzbank (CBK.GR in Frankfurt or CRZBY in New York) has announced that it will take a pass on any new lending business that isn’t tied to its core markets in Germany or Poland.