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Welcome to bne's "Investment Bank Survey 2011", our second annual survey for Central and Eastern Europe compiled from interviews and using data from Dealogic. Despite the nervous pall that hangs over the capital markets, our 2011 survey shows that investment banks in the region managed to hold their own against the deteriorating crisis conditions. However, it's an open question whether 2012 promises to be a further step back towards the nadir hit in 2009 or the base from which a recovery in business can be built.

2011's total M&A transaction volume in CEE was $158.2bn, which was down from $192.0bn worth of M&A deals in 2010, but well up from the $99.5bn recorded during the depths of the crisis in 2009 (the full tables can be accessed via the pdf in the "Special Reports Archive").

This pattern was repeated in the debt and equity capital market categories: the top 20 investment banks managed $100.9bn of debt deals in 2011, which was down from the $116.4bn worth of deals in 2010, but up from $92.2bn in 2009; and the banks managed equity capital market deals worth $19.5bn in 2011, which was down from $23.3bn in 2010, but up from $9.6bn in 2009, reports Dealogic.

The winner of the "bne 2011 Best Investment Bank for M&A" was Deutsche Bank, which advised on 19 transactions worth $22.5bn. VTB Capital was the most successful of the regional banks, coming in fifth place with 23 deals worth $15.1bn, but this was significantly down on the $20.6bn worth of deals that it advised on in 2010, reflecting the hostile business environment in Russia in the second half of last year.

However, VTB Capital won both the "bne 2011 Best Investment Bank for Equity Capital Markets" and the "bne 2011 Best Investment Bank for Debt Capital Markets". VTB has been on a roll since it was set up in 2008 and is today the largest regional investment bank.

Following on VTB Capital's heels are peers Sberbank and Gazprombank in the debt capital markets, and Renaissance Capital in the equity capital markets - all of which were active in Russia and the wider Commonwealth of Independent States region.

Local banks

Due to the disparity in the size of the various markets in CEE/CIS, there are the "bne 2011 Best Local Investment Bank awards for the crop of banks operating in the local economies. The investment banking business in the smaller economies of the region is mixed, as it remains in its infancy and very underdeveloped in many of the countries, so we have tried to choose the most interesting.

Dragon Capital remains the top bank in Ukraine and is the clear winner of the "bne 2011 Best Local Investment Bank Ukraine". Founded almost a decade ago, Dragon has been a pioneer in the Ukrainian capital markets, and today accounts for about a third of the turnover on the Ukraine Exchange, and the lion's share of bond underwriting and M&A advisory. However, the Ukrainian capital markets have been walloped by the crisis and the ongoing political uncertainty has depressed both trading volumes and the amount of inbound investment to such an extent that Georgia's BG Capital, one of Dragon's main competitors, closed its offices there in November. Still, Dragon completed the IPO of Coal Energy on the Warsaw Stock Exchange, the second largest Ukrainian IPO ever and the biggest IPO since the financial crisis erupted.

The award for "bne 2011 Best Local Investment Bank Kazakhstan" goes to Visor Capital, which occupies a similar space in Central Asia to Dragon in Ukraine. And like Ukraine, Kazakhstan is still struggling in the aftermath of the crisis. Even so, Visor was able to close one M&A deal in 2011, the sale of a 50% stake in local pharmaceutical company Khimpharmn to the Polish group Polpharm for an undisclosed amount. And there are hopes for a huge boost in business this year as it looks as though the National Bank of Kazakhstan will opt to give local banks, not international investment banks, the business to manage the individual listings of the so-called "People's IPOs" - a programme to sell shares in some of Kazakhstan's largest state-owned companies to the population at a discount.

Finally, there is a special mention for Mongolia's leading investment banks: Frontier Securities, MICC and Monet Capital. The Mongolian capital markets are right at the very beginning of their development and there are few deals to write home about. However, 2011 saw US investment manager Firebird Management buy up 40% of the free float on the Mongolian Stock Exchange in a matter of days, sending the index soaring from 6,164 to a peak of 32,955 in March. It has since fallen back to about 20,000, but that still made Mongolia yet again the best performing stock market in the world in 2011.