| Andrew Pisker | ||||||
Investment banks are struggling to reinvent themselves amid dire markets conditions.
One of the more eye-catching of a slew of such changes is the Dresdner Kleinwort Wasserstein decision to merge global debt and global equity into a single, global capital markets business.
Debt and equity are so fundamentally different that merging the two sounds distinctly odd. But the firm insists this is not mere cost-cutting dressed up. It’s cut plenty of costs anyway and has no need to disguise it.
Certain core parts of the old bond and equity departments – such as cash and derivatives sales and trading – will remain separate and merely report, under a new structure, to Andrew Pisker, the new global head of capital markets. But Pisker estimates that 60% of staff in the debt and equity divisions will find their work affected by the merger.
One of the more radical changes will be in research, where the separate equity and debt teams will now report to former head of equity research Robert Lister. “Sophisticated debt investors are increasingly looking at more esoteric companies and want research that looks a little more like traditional equity research,” says Pisker.
Increasingly, comparing different companies’ capital structures, the traditional province of debt analysts, may come to inform stock picks in such sectors as telecoms. But the jointly produced report, from which debt and equity salesmen and investors might draw separate conclusions, is some way off.
Many other firms must be pondering such a merger. “Bringing the core company analysis component together from debt and equity research would seem to be low-hanging fruit for any investment bank looking to rationalize,” says a partner at a leading consulting firm to the investment banking industry.
