Guest Comment: Banks on angling trip for equity analysts

While last year saw the forced departure of several sell side analysts from leading investment

banks, how time is a great healer. Several bulge bracket investment banks have been hiring considerably from Junior Associate right up to Lead Analyst level.

Equity research recruiters are also seeing team moves as opposed to individual analyst moves.

There is also a competitive edge occuring when one bank poaches a team from another Extel or Institutional Investor ranked investment bank. This has been a popular course of action in a range of sectors.

As the market has picked up we have seen a greater flexibility from clients in the kind of profile they look for from candidates wanting to join an equity research team. I have placed newly qualified ACAs with no prior research experience into associate positions at bulge brackets (see related article). This is proving to be a popular pathway; other profiles arrive by way of the buy side, consultancy and corporate finance routes, all effective methods of getting

into equity research.

Types of research have also changed, with the emphasis now very much on thematic research. Research is ranging form short e-mail pitches to 80-page documents. However, it is increasingly clear that research needs to be ever more insightful and value added. The thematic piece is proving highly successful, especially with the buy side clients. In the US this is certainly the view and has now transferred to the pan-European markets.

The role of a researcher is also shifting, with more emphasis put on marketing trips and roadshows. For the senior researchers this can take a toll as lead analysts try to balance

work and homelife with travelling to the US and Europe. This has caused some City of London analysts to focus on purely small/mid cap UK stocks.

Experienced equity researchers are also showing themselves to be keen to work for more niche players as opposed to the larger houses. There is still a feeling of disillusionment amongst senior bankers with regard to Chinese walls. Working for a house without a corporate finance division is proving more attractive so senior analysts can produce pure untarnished independent research.

Certainly, as the market moves from being more client-driven to candidate-focused, investment banks are prepared to think "outside the box" in order to maximize their search for future talent. Within equity research we are also seeing a rise in placements for international candidates who have been educated at the "grandes écoles" or at the US Ivy League universities. However, we have yet to see the academic establishments of the expanded EU, for example the Universites of Warsaw or Krakow in Poland, to be recognized by most investment banks.

A big part of why hiring in research is on the up is that with the Spitzer compliance regulations in place, confidence in the markets and banks is at its highest in years. The question remains whether we are now going down the path of independent research boutiques or the road of separate research divisions within investment banks. Cost will be an obvious factor on that front, but either way, equity research divisions should continue their add-to-staff hires, if not exactly to pre-2002 levels.

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