April 2005
Credit research poll 2005: Banks consider new order for analysts
Modular rather than maintenance seems to be the new buzzword as the key to success in a rapidly changing environment for credit research. But every investment bank seems to have a different view about the implications for analysts. To publish or not to publish? Cross asset or sectoral? Client facing or in house? Whatever the decision, only the best analysts will survive.
WHY DO BANKS still churn out daily sector updates chronicling company results, rating changes and the like? Maybe it's a matter of inertia. "Banks do maintenance research because at a party you expect peanuts, even though you don't go to the party in the first place to get them," remarks one head of research.
For a long time the philosophy in bank research departments, which has also pervaded credit research teams, has been that providing a full range of research products and services and exhaustive coverage on every name, asset class and sector to external clients is something banks should be doing because it was expected of them.
If you did trading and underwriting, you weren't much of an institution if you didn't have a first-class research team as well. But that harks back to the period before New York state attorney-general Eliot Spitzer threw a spanner in the works. In those days, having an award-winning team of analysts meant a lot.
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