This paper investigates conflicts of interest associated with relationship banking. Using a sample of 270 German initial public offerings (IPOs), we ask if universal-bank-underwritten IPOs perform differently from IPOs underwritten by specialized investment banks. We find that universal-bank affiliation is correlated with higher first-day returns (underpricing) but uncorrelated with long-term performance, suggesting that underpricing compensates for potential conflicts of interest. Our results also suggest that preexisting bank relationships, rather than issuer characteristics, may determine underwriter choice.