SBC Warburg lands pounds 1bn Fuji Bank convertible issue

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Europe's investment banks were claiming a victory over their larger American rivals yesterday after SBC Warburg won a lucrative mandate for one of the largest convertible preference share deals.

SBC Warburg, the investment banking arm of the Swiss Bank Corporation, is arranging the 210bn (pounds 1bn) issue for Fuji Bank, Japan's fourth-largest bank.

The City had expected the issue to be handled by either Goldman Sachs or Morgan Stanley, two US investment banks. Nomura and Yamaichi, two Japanese firms, are also involved in the issue.

"The Europeans have broken the American cartel. There have been a number of these deals over the last year and every single one has been managed by by a US house," said one banker yesterday.

"It's also significant because its one of the largest ever Euro-convertibles of all time," he added.

It gives a boost to European banks, which are fighting hard, and spending millions of pounds on hiring top professionals to break the hold that US banks have on many areas of the global investment banking markets. Bankers expect similar issues to Fuji's because Japanese banks have poor capital positions.

European banks want to boost their presence in this area because it can be highly lucrative. In the UK, NatWest and Barclays, which owns the BZW investment bank, have huge aspirations to win the title of global investment banks.

Continental European banks also harbour the same aspirations. Deutsche Bank, the German banking giant, is building up its investment banking arm after buying Morgan Grenfell in the UK. Dresdner, its German rival, is conducting a similar exercise via Kleinwort Benson, which it bought last year.

ABN Amro and ING, the two leading Dutch financial institutions, also want to be global players in this field and are using British companies to boost their clout.

There is some evidence that the Europeans are making a dent in the US armour. Data from IFR, a trade journal, shows BZW is now fifth in the league tables for Eurobond issues compared with 17th at the end of last year.

But some analysts argue that the Europeans have a long way to go and risk huge losses if their attempts to grow in this area run up against a downturn in worldwide markets.

One US investment banker was sceptical about the significance of the win by SBC Warburg. "It's only one mandate in a very particular field. We are way ahead," he said.

But he acknowledged the issue dwarfed the similar deals run by US investment banks in the last year.