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Rivals Close Gap, But Lehman Keeps Lead
Asset Backed Alert, Harrison Scott Publications Inc. (December 22, 2006)

Lehman Brothers has nailed down its second straight victory as the world's most active underwriter of securitized products, but with its smallest market share in years.

Heading into the final weeks of 2006, the bank has run the books on around $195 billion of asset-backed securities, collateralized debt obligations and residential and commercial mortgage bonds around the world. That works out to a 7.6% share of the $2.5 trillion of deals that have priced this year, according to preliminary figures from Asset-Backed Alert's ABS Database.

When it won the same contest in 2005, Lehman laid claim to 8.3% of all bookrunning mandates. Even in 2004, when it finished a narrow second to Bear Stearns, the bank controlled 8.4% of the market. The same held true in 2003, when its 8.6% piece of the pie was good for second place behind Credit Suisse.

The slide comes partly because increases in Lehman's own bookrunning volume have come slower than overall growth in the market, which figures to total more than 15% this year. Some of that action has trickled down beyond the top-10 underwriters, but a nice chunk also went to three of Lehman's top rivals: Citigroup, Deutsche Bank and Royal Bank of Scotland. Those banks were able to post far larger underwriting-volume gains, in overall dollar terms, than Lehman.

Citi and Deutsche lead those players, each with about $190 billion of league-table credit, and each with a 7.4% slice of the business. A year ago, Citi was in sixth place with a 6.7% market share. Deutsche was barely ahead in the number-five position, at 6.8%.

Royal Bank of Scotland and its Greenwich Capital affiliate, meanwhile, have sealed up fourth place for 2006. While that's actually a step backward from the bank's third-place standing a year ago, it reflects a slight increase in its market share, now around 7%.

For Lehman's part, it can be difficult for banks with such huge underwriting volumes to post massive year-over-year jumps in their business, in percentage terms.
Credit Suisse is in fifth place, down from fourth at yearend 2005.
Asset-Backed Alert will publish its final yearend rankings on Jan. 12.



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