While the rest of the investment banking world frets about whether MiFID II could mean an influx in demand for quality equity research or yet another bloodbath of analysts, German bank Berenberg has been in expansion mode.
A 50% uptick in investment banking revenues during 2015 was largely on the back of increased demand for its secondary research product – which was rolled out in the U.S in September – and headcount increased by 80 people (to a modest 1,330). Already in 2016, it’s continued to hire.
Predominantly, it’s brought in more equity researchers. Batuhan Karabekir, an equity research analyst at Barclays, has just signed up, as has Olivia Peters, who has been a construction and services analyst at RBC Capital Markets for the past five years, and Carsten Hesse, who is an emerging Europe equity strategist and joined from Wood & Co.
Berenberg has also been building out its equity trading desk. Former professional golfer Edward Burlison-Rush, has joined its UK equity trading desk from Liberum Capital, as has equity sales trader Mark Edwards. Peter King, who was an executive director in Pan-European sales trading at J.P. Morgan, also joined Berenberg late last year.
Berenberg’s head of equities David Mortlock said that the “counter cyclical” investment in equities during 2008-09 has begun to pay off.
Berenberg clearly sits in the camp that thinks the ‘unbundling’ of equity research under the MiFID II regulation – which comes into effect in 2018 and requires asset managers to separate research costs from trading commission spend – will result in an uptick in demand for quality research.
The other argument is that demand for research will slide now that clients have to pay for it directly and therefore equity researchers will be sitting in even shakier seats. Currently, some large banks have been hiring star analysts, and then supporting them with a small team of juniors. Others have culled research teams, specifically citing MiFID II as a reason.
Berenberg’s staff costs across the group in 2015, which includes private banking, asset management and corporate banking, were €186m, or €139k ($150k) per head.
Photo: Brand X Pictures/Digital Vision/Thinkstock