Pfizer Inc’s $68 billion deal to buy Wyeth gave boutique investment banking firm Evercore Partners a huge jump in the rankings of merger advisers, while Lazard Ltd got left on the sidelines.

One mega-deal was enough to catapult Evercore, which advised Wyeth along with Morgan Stanley, into the list of Top 10 advisers. Evercore now stands at No. 7 for the global and U.S. rankings, up from No. 24 and No. 16 in 2008, according to data from Thomson Reuters.

Morgan Stanley stands at No. 2 globally with 15 deals, and No. 3 in the United States with 10 deals, according to Thomson Reuters.

Pfizer had an army of advisers that included Bank of America, Merrill Lynch, Goldman Sachs, JP Morgan, Barclays and Citigroup. Bank of America Merrill Lynch leads the global league tables, while Barclays Capital leads in the United States, according to Thomson Reuters.

One name missing from today’s news was Lazard, which has been Pfizer’s most active adviser going back to the early 1990s, according Thomson Reuters.

Lazard has advised Pfizer on 15 deals, including its $89 billion purchase of Warner-Lambert Co  in 1999 and $61 billion acquisition of Pharmacia Corp in 2002, the data showed.

Lazard did not immediately return calls seeking comment.

“Too big to fail” are four words that should fill U.S. policymakers with dread. They imply a necessity for solvency beyond an institution’s ability to make good business decisions. They’re also a badge of achievement that commands a bit more swagger on Wall Street.

So when Bank of America, with $2.7 trillion in assets and 308,000 employees, says it needs more help in the form of billions of dollars from taxpayers, which we have set aside for just this kind of mess (the Troubled Asset Relief Program), you could argue that this is both economic blackmail and reward for a job well done.

What happens when a bank becomes too big to fail? It gets shrunk down to a size more collapsible. The titans of Wall Street know a thing or two about being in hock to the people. Take a look at Citigroup. It’s all well and fine for CEO Vikram Pandit to say the sale of his brokerage business to Morgan Stanley was not mandated by the government, which has lent Citi $45 billion to stave off failure. But it’s hard not to see a wink and a nudge in there somewhere. This was not some non-core, fringe business — it’s more like an arm or a leg.

The big restructuring plan Citi is expected to announce tomorrow is seen taking Sandy Weill’s “financial supermarket” down in size by about a third. That may still be too big to fail, but it’s getting a lot less so by the quarter. And what of Morgan Stanley, the purchaser of Citi’s arm or leg or whatever. Lehman Brothers was deemed not too big to fail; how does Morgan stack up, now that it’s getting bigger?

Oddly enough, outgoing U.S. Treasury Secretary Henry Paulson - yes, the guy holding the TARP strings — is reported by The Wall Street Journal to be driving the Bank of America talks out of concern that the bank might not have the money to complete the buyout of Merrill Lynch. Almost seems like insurance we the people are taking to make sure we can keep our biggest banks too big to fail.

In other Deals News…

* South Korea hopes to raise 4.6 trillion won ($3.4 billion) via state-run firms selling stakes in domestic companies, including Korea Life and GM Daewoo, in its latest move to reform state-run institutions.

* French bank BNP Paribas may bid for about 60 percent of custodian-services business Caceis, jointly owned by rival banks Credit Agricole and Natixis, La Tribune reported.

* Spain’s Prisa cannot agree on a price to sell its Digital+ pay TV unit to potential buyers Telefonica and Vivendi and has pulled out of talks, Negocio reported citing sources close to the talks.

* Ahli Bank of Qatar said the Gulf state’s sovereign wealth fund would begin buying shares in the lender next week and would take 10 percent of its share capital by the end of 2009.

(Photo: Buckshot the bull is corralled in front of the New York Stock Exchange as part of a promotion, January 8, 2009. REUTERS/Brendan McDermid)

It’s not every day we have to dust off our Latin texts to cover Wall Street news, Morgan Stanley’s plan to acquire Citigroup’s Smith Barney brokerage over the next five years inspired eclectic Bernstein Research analyst Brad Hintz to invoke Julius Caesar: “Alea Iacta Est” “The Die is Cast!”

Hintz, in a client note, draws a parallel between the ambitious young conqueror, who uttered the above while leading his army across the Rubicon to reclaim Rome, with Morgan Stanley CEO John Mack, who with this latest move accelerates the investment bank’s expansion into retail financial services.

He argues the new strategy is not unlike the one advanced by former CEO Philip Purcell, whom Morgan’s board threw overboard in 2005 as the bank lost ground to Goldman Sachs. Purcell launched the Discover credit card and merged his middle-class Dean Witter brokerage with Morgan Stanley & Co in 1997. Over time, he frustrated the white shoe bankers with his aversion to taking investment and trading risks.

Mac, who replaced Purcell in 2005, pushed Morgan Stanley to find its old swagger. He spun off Discover, expanded its mortgage business and deployed more capital to finance leveraged buyouts. But the credit crunch and the collapse of Lehman last fall has forced Morgan, which suffered some major losses, to change gears once again.

“Morgan Stanley has reversed course and revived the old “Phil Purcell strategy” of pursuing retail brokerage and tightly constraining trading risk,” Hintz told his clients in a note.

The Morgan Stanley, once associated with the likes of investment banking stalwarts Dick Fisher, Bob Greenhill and Joe Perella, will become a Federal Reserve-regulated bank that relies on asset management fees, margin lending and commissions from individual investors. It will look a lot like Merrill Lynch or, dare we say, the Purcell-led Morgan Stanley Dean Witter.

(Picture credit:Bust of Julius Ceasar REUTERS/Alessia Pierdomenico, Morgan Stanley Chairman and CEO Purcell gestures during his speech at Fortune Global Forum in Beijing, May 18, 2005. REUTERS/Alfred Cheng Jin)

With the ink drying on Citi’s deal to sell Smith Barney to Morgan Stanley, the media bulls-eye is focusing on Citi CEO Vikram Pandit. “Citigroup’s board may have said it is standing behind CEO Vikram Pandit, but the general consensus on Wall Street is that he is running out of time,” CNBC’s Charlie Gasparino reported this morning. Pandit’s predecessor Chuck Prince certainly had boardroom support when the street turned against him, so tales of Pandit’s demise may not be too exaggerated, though they could not have been more callously timed. Today is Vikram Pandit’s 52nd birthday.

Of course, it’s a truism of corporate America that every CEO has the support of his board — until he doesn’t. And even if the current board is rock solid for Pandit, it’s an open question how safe the board’s own tenure is given the bank’s miserable track record — and the fact that Uncle Sam is now its top shareholder.

Citigroup, once the world’s largest bank, may announce plans on Jan. 22 to formally shed the “financial supermarket” approach once championed by former Chief Executive Sandy Weill, but which Pandit has now turned his back on.

Pandit is widely expected plans to refocus the bank on its core global banking business. But selling assets in Japan, China and Germany, as it has recently done, is no way to grow a global banking business. On top of that, the Wall Street Journal reported on Wednesday that the bank will focus on “large corporations and rich individuals.” But through the Morgan Stanley-Smith Barney joint venture agreed yesterday, it’s shedding a big chunk of its wealth management business. The question remains Pandit will need to answer, and quickly, is what exactly Citigroup is supposed to look like when the dust settles.

A person familiar with the plan tells us that Citi plans to adopt the equivalent of a “good bank, bad bank” structure, in which it would slim down to a business model recalling the former Citicorp. There’s another question. Who in their right mind is going to put money into bank for bad Citi assets? Why, the U.S. government, of course. If President-elect Obama was at all daunted by the resistance congress is showing to releasing the second $350 billion installment of TARP money, the direction Citi is headed may make selling TARP 2 even harder.

Will Citigroup CEO Vikram Pandit last in his job through the end of January?

Other Deals News

* Chrysler is in talks to sell key assets to Renault-Nissanand auto supplier Magna according to people with knowledge of the discussions, though the French automaker denied such talks were under way.

* The German government is set to take a stake in Hypo Real Estate, sources with knowledge of the matter said, a move that would mark the second part-nationalisation of a German bank this year.

* Japan’s Toshiba said it is in talks to buy Fujitsu’s hard-disk drive business, a deal that would create the world’s largest maker of small hard drives and is reportedly worth $340-$450 million.

* German bank B. Metzler seel. Sohn & Co Holding AG and Merrill Lynch have taken combined voting stakes of 35.75 percent in Continental, the German automotive supplier said.

* A subsidiary of Egyptian telecom giant Orascom Telecom has bought Namibian mobile operator Cell One in a $59 million cash deal, OT said.

* Swedish engineering group Alfa Laval said it had bought one company and signed a deal to buy another.

(Photo:Vikram Pandit of Citigroup, photographed in 2004 when he worked for Morgan Stanley. REUTERS/Peter Morgan)

In many ways, Citigroup has been the poster child for the kind of reform lawmakers seem to be talking about when they pump up the bullhorn and turn on the state taps. Too big to fail, losing staggering amounts of money, a product of the excesses of 10 years of low interest rates, Citi’s businesses are too numerous to recount, often competing with one another for clients.

It’s so big that plans to spin off its brokerage business into a joint venture with Morgan Stanley will create the biggest brokerage in the United States. A JV, expected to be announced this week, would have an estimated value of $16 billion to $20 billion, a source said, and would have more than 23,000 financial advisers, surpassing rivals Bank of America and Wells Fargo.

There are reasons for optimism that the making of a mega-broker could mark the beginning of a huge round of long-sought consolidation in the financial sector. It would certainly mark a huge divestment for Citi’s embattled CEO, Vikram Pandit. And it also comes as signs of more asset sales poke up through the quagmire of recession. South African billionaire Johann Rupert’s investment vehicle is looking at buying Lehman Brothers’ merchant banking business.

There are also reasons to worry that taxpayers are not done footing bills. Britain has had to pump more than $25 billion into Lloyds TSB and its takeover target, HBOS, after investors turned up their noses at a rights issue. Germany pumped 10 billion euros into Commerzbank last week.

And unless the promised recovery kicks in soon, having a stake in a giant brokerage might not prove as profitable as investors hope.

In other Deals News:

* Ford Motor has had talks with potential bidders for its luxury Volvo brand, Ford Chief Executive Alan Mulally said.

* Malaysia’s national car company Proton may sell a controlling stake to a foreign carmaker, company Chairman Nadzmi Mohd Salleh told the Business Times newspaper.

* African investment bank and asset management group Imara Holdings said it had formed an alliance with Nigerian financial services firm Chapel Hill Denham to give it a foothold in Africa’s most populous nation.

(Photo: A Citibank branch sign is seen behind a road sign in central Sydney REUTERS/Tim Wimborne)

Thanksgiving has come early for embattled Citigroup. The second-largest U.S. bank by assets received a pardon of sorts from the government late on Sunday, getting a $20 billion lifeline – the biggest bank bailout yet.

The bank had been widely thought to be too big to fail because of its global reach. Chief Executive Vikram Pandit and other top management will keep their jobs, but the government will have the final say on executive pay packages.

Citigroup’s shares lost 20 percent of their value on Friday, closing at $3.77, down 60 percent for the week and reaching their lowest level since December 1992. The group’s market value fell to $20.5 billion. That’s a far cry from the good old days of late 2006 when the bank’s market value topped $270 billion.

Citigroup’s market value is now also in line with Goldman Sachs Group Inc. Which makes for interesting speculation: Might Goldman be interested in picking up its rival at current low prices? A person familiar with Goldman’s strategy said it was not interested, but CreditSights said an acquisition of Citigroup by Goldman or Morgan Stanley would significantly add to earnings, if Citi’s bad assets were absorbed by the U.S. government.

For now, Citigroup is alive. But the carving of the turkey may be just around the corner.

More Deals of the Day:

** China Life Insurance Co, the world’s biggest life insurer by market value, is interested in buying Asian assets of American International Group, a senior China Life manager briefed on the situation said.

** Johnson & Johnson Inc will acquire Israel’s Omrix Biopharmaceuticals Inc for $27 a share, or a total of $465 million, the Globes financial news website said.

** Major shareholders of Hynix Semiconductor picked Credit Suisse, Woori Securities and Korea Development Bank to lead manage the sale of 36 percent of the chip maker in a deal that could be worth about 968 billion won ($646 million) at current market prices.

** The United Arab Emirates began to bail out Dubai’s rattled lenders, consolidate its financial sector and cap a building spree as the former boomtown began cutting state spending in the face of the global crisis.

** Slovenian telecoms provider Telekom said on it hopes to buy Macedonian mobile phone operator Cosmofon, adding it was also looking for other takeover opportunities in the Balkans.

** Inhaled-drug specialist Vectura’s Chief Executive Chris Blackwell said the company is looking to make acquisitions to boost its pipeline, adding that it may consider non-inhaled products to do so.

** EADS agreed to keep for three years a majority stake in three German plants it had planned to sell, German newspaper Financial Times Deutschland reported, citing industry sources.

** Key details remain undecided about a government-led plan to restructure swathes of Dubai’s financial sector, Wasim Saifi, chief executive of Dubai-based mortgage lender Tamweel said.

** SSL International Plc, a maker of Durex condoms and Scholl footcare products, said it agreed to buy the Crest condom brand and related assets for 7 million Swiss francs ($5.72 million) in cash from privately owned Doetsch Grether AG.

Some in the financial industry apparently smell opportunity in the latest round of mergers and blood-letting among top banks.

Referring to the Wells Fargo takeover of Wachovia as the WWF and placing Bank of America CEO Ken Lewis atop a bucking Merrill Lynch bull are just a couple of the attention-getting devices financial sector recruiting firm RJ & Makay uses in its latest promotional You Tube video.

Branching out from a previous video aimed at Merrill Lynch brokers, the new “Billion Dollar Video” (the company claims assets from advisers brought to them via these viral recruiting tools represent billions of dollars) targets all financial advisers but specifically appeals to those currently at Merrill Lynch and Wachovia.

Those brokers are grappling with with the question of whether to accept a retention/transition package, move to another firm or go independent. RJ & Mackay is clearly hoping they’ll opt to walk and chose the firm to advise them on where to go next.

The just over four-minute short could help at least get their attention. It’s an equal opportunity stick poker, targeting all the big hits of this financial season. JP Morgan Chase, Bear Stearns, Fannie and Freddie are all in there along with Lehman, Buffett, Goldman, AIG, Morgan Stanley, Bernanke, Paulson, the government bailout, executive greed, executive kool-aide dispensers and dealing with those pesky gnats, known as recruiters.

Watch here:

The $9 billion stake in Morgan Stanley that Mitsubishi UFJ Financial Group bought earlier this month was a risky bet for a Japanese bank. Often leaning heavily on state support, banks in Japan aren’t known for taking chances. Perhaps betting with house money is going to their heads. 
 
MUFG bought just over a fifth of Morgan Stanley for more than the whole bank was worth back on Oct. 13. Now it is raising up to $10.6 billion by selling new shares — 18 percent more than it paid for the Morgan Stanley stake, not even counting the huge run-up in the value of the yen that makes any local share issuance pricier than anywhere else on the planet. Meanwhile, back in the United States, shares of Morgan Stanley have fallen 9 percent since revised terms of the MUFJ deal were announced on Oct. 13, and the dollar has fallen another 8.6 percent against the yen.
 
MUFG’s fund-raising helped convince investors to dump Japanese shares today, sending the Tokyo market to its lowest level in 26 years. This prodded the Japanese government into action. Japan’s banks are heavily exposed to the local equity markets, and were bailed out less than a decade ago. The government says it wants to set up a state body to buy shares from banks, and limit bank recapitalizations.
 
Japan is the best versed industrialized economy when it comes to zero interest rates and deflation over the past two decades, though all that practice has not made it very adept at stimulating growth. With the yen soaring toward 90 to the dollar, U.S. assets are going to look mighty cheap again, and if Japan’s newly risk-embracing banks are looking for entry points, it could well be the Bank of Japan that takes on the mantle of global lender of last resort. 
 
Deals of the day:

* Porsche plans to gain control of more than 75 percent of Volkswagen in order to pass a domination and profit transfer agreement that would grant it full control of VW’s cash flows, Porsche said on Sunday.

* General Motors and Chrysler have moved closer to offloading two niche vehicle brands associated with the era of cheap gasoline and big profits for Detroit, even as both sides intensified talks on a merger that would combine the struggling automakers. The two auto makers are discussing a merger that would keep some of Chrysler’s operations intact and save jobs with the aim of securing the U.S. government financial aid the high-stakes deal would require, people familiar with the talks said on Sunday.

* CenturyTel plans to buy Embarq for $5.8 billion in stock, in an effort to cut costs and stay competitive amid a decline in the traditional phone business.

* India’s Mahindra & Mahindra repeated it was not interested in General Motors‘ Hummer brand, which the cash-hungry U.S. automaker has put up for sale.

* German oil and gas company Wintershall has bid 110 Norwegian crowns per share to buy Norwegian Revus Energy, a premium-rich offer that Revus’s board has unanimously backed, the firms said on Monday.

* Canada’s Enbridge is considering offering aboriginal groups an equity stake in its planned 525,000 barrel a day Northern Gateway oil sands export pipeline in order to secure support for the project, a company official said on Friday.

* British energy firm BG Group will buy Australian coal seam gas firm Queensland Gas in a deal worth up to A$5 billion ($3.1 billion), the Australian Financial Review reported on Saturday.

* Libya is considering investing in Telecom Italia, its ambassador to Italy told Il Sole 24 Ore newspaper, and could ask for a deputy chairman’s post at UniCredit bank, where it is now a top shareholder.

* Telecom Italia has no intention of selling its German operation despite recurring rumours that the Italian operator is looking to dispose of Hansenet, its chief executive said on Saturday.

* OAO Severstal, Russia’s largest steelmaker, said on Saturday it would pay major shareholders of PBS Coals C$382 million ($302 million) less than it agreed in August to acquire the company, reflecting a collapse in coal and steel prices.

* Saudi-owned MBI International will sign an agreement to buy 12 hotels in France from Starwood Capital in deal that could be worth $2 billion, a local newspaper reported on Sunday.

* Israel’s Bank Hapoalim said on Sunday regulators forced it to cancel a planned purchase of a controlling stake in Ukraine’s OJSC Ukrainian Innovation Bank.

* Britain’s London Scottish Bank is considering selling its debt collection division and closing its lending and other businesses after failing to find a buyer for the whole thing, the Sunday Express reported.

* Qatar Airways has expressed an interest in taking part in the privatisation of Greece’s state-owned Olympic Airlines, Greek Prime Minister Costas Karamanlis said on Sunday.

* The privatisation of Austrian Airlines will be postponed because it involves the assumption of part of its debt by the government, a supervisory board member of Austrian government holding company OeIAG said on Sunday.

* Malaysia’s state investment arm Khazanah Nasional said it has bought a 10 percent stake in Jadwa Investment, a Saudi-based shariah investment firm, for 270.9 million ringgit ($75.7 million).

* China Huaneng Group, one of the country’s largest power generating firms, has bought a 40 percent stake in Huating Coal Group, the top coal mining company in the northwestern province of Gansu, the company said.

* South African stock exchange operator JSE Ltd said on Monday it planned to acquire the Bond Exchange of South Africa for 173 million rand ($15.3 million) in cash, to compete better internationally.

* The United Arab Emirates central bank governor said on Monday mergers between banks in the Gulf state would be a good choice because consolidation would help cut costs.

“It’s very clear to me — we’re in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down,” Morgan Stanley Chief Executive John Mack told employees in a memo.

Ya think?

Morgan’s stock dropped 47 percent yesterday, and shorting investment banks has become the trade du jour. But it is odd for the head of a Wall Street investment bank to inveigh against short selling–hedge funds that bet on shares dropping are some of Morgan Stanley’s best customers. 

And Morgan Stanley itself was caught up in the debate over how to regulate and manage short selling a few years ago. It was one of 11 investment banks accused in 2006 of failing to deliver securities sold short by hedge funds - a service they made a healthy business of. Mack himself was named in an SEC investigation into the claims.

Today, new SEC rules on short selling come into effect that are aimed at forcing short sellers to be more transparent and responsible. Maybe they will have the desired effect. Then again, all this bellyaching about shorts may seem irrelevant if the $180 billion of global central bank support lifts markets in the coming days. 

Deals of the day:

* China’s CITIC Securities is not holding any talks on investing in Wall Street bank Morgan Stanley, a senior executive at CITIC Securities, the country’s largest brokerage, said.

* Britain’s Lloyds TSB sealed a rescue takeover of HBOS to create a dominant mortgage and savings bank in a $22 billion deal helped through by a competition law change. 

Lehman’s most valuable assets, primarily Neuberger Berman, are still on the block, but becoming less valuable by the hour with the bank having filed for bankruptcy protection. And with Merrill Lynch now heading for the relative safety of Bank of America’s $50 billion embrace, it’s time ask “Who is next and how?” Most attention is squarely focused on insurer AIG and investment bank Morgan Stanley.

AIG’s shares lost a third of their value in pre-market Monday action. Warren Buffett would be a natural candidate for AIG assets, given it’s a business he knows (and part of being a successful oracle is knowing your businesses).

On Sunday AIG is reported by the New York Times to have approached the Fed seeking $40 billion in short-term financing. An investor call is expected later today.
The Fed might be more willing to play a role in getting AIG sorted out as well, if it sensed a systemic risk to another strut of the financial markets.

AIG execs reportedly met top New York state officials including Governor David Paterson and insurance and banking regulators over the weekend, seeking permission to liquidate assets, such as Manhattan real estate, to raise cash.   

Morgan Stanley could be a much tougher sell, if it comes to that. The market for investment banks is not too healthy, to say the least.

Other deals of the day:

* Longs Drug Stores said it will weigh a $75 per share takeover bid by Walgreen, but the drug store chain said for now it still recommends that shareholders accept an earlier tender offer by rival CVS Caremark.

* Chinese state-owned trading firm Sinosteel’s stake in Australian iron ore prospector Midwest Corp has risen to more than 82 percent after a former senior Midwest executive sold a stake, Sinosteel said on Monday.

* Israeli food maker Osem Investments and Swiss parent Nestle signed a deal to buy 51 percent of a unit of Maabarot Products for 248.7 million shekels ($69 million), Osem said.

* Google has bought Korean blogging software developer Tatter and Company, the two companies said.

* Borealis Infrastructure Management, an investment arm of the Ontario Municipal Employees Retirement System, said it has formally commenced its takeover bid for Teranet Income Fund for C$11 per unit.

* The chief executive of Northwest Airlines said he still expects the carrier’s merger with Delta Air Lines to close in the fourth quarter.

You can place a bet on the next victim of the credit crisis by clicking on the graph below, which links to the news prediction website www.hubdub.com.

Which of these banks will be the next victim of the credit crisis?