Angola’s updated mandate this week, which now gives Deutsche Bank, Goldman Sachs and ICBC top billing, is a good example of a deal where banks have taken varying views on their willingness to be involved in a public deal.
Several big EM houses such as BNP Paribas and JP Morgan, declined the offer of involvement in the trade, and others said that they too could not have accepted the mandate. But the three mandated banks are well respected and their compliance teams took a different view.
A compliance restriction covers all manner of issues, from something untoward appearing in due diligence to a bank believing its reputation is at risk if it is involved.
Had compliance teams been harsher in 2011, it is possible that BNP Paribas, Deutsche Bank, Royal Bank of Scotland and Sberbank may have avoided the very public kicking they received in the UK’s national press for participating in a Belarus bond — a country which had a president on EU and US lists of individual financial sanction targets after his aggressive handling of a peaceful protest in 2010, but which posed no legal issues for the banks involved.
The compliance restrictions over the last year, where EM bond deals are concerned, seem to have been made on a case-by-case basis. BNP Paribas hit the headlines twice in the last year for having turned down first Ethiopia at the end of last year, and this year Angola.
But at the same time, JP Morgan was willing to print for Ethiopia — and indeed is accompanying them on a non-deal roadshow this week — but declined Angola.
Deutsche Bank, which is now on the Angola deal, is thought to have stepped away from other EM trades in the last year.
Bankers have been quick to draw conclusions from the mandate iterations for Angola, with comments about whether this indicates a step back for some banks from Africa, or indeed CEEMEA. On the other side of the coin, others have been keen to take the opportunity to raise eyebrows at those banks that have accepted the deal. Neither criticism is fair.
It would be easy for banks to grab the fees available on EM deals and run — heaven knows bond fees are sometimes hard enough to find in CEEMEA these days without turning down the mandates that arrive on a platter.
The real consideration for each deal deserves praise and will help the the reputation of both the emerging markets and the banks working in them.