Seeking bright spots
As volumes and margins fall in conventional sales, trading and new issues, leading equity firms are desperate for new sources of revenue.
Jon Sandelman is a rarity in these equity markets. While his competitors seem to do nothing but get rid of staff, cut back on coverage and worry about conflicts of interest between research and investment banking, Sandelman is convinced that his firm, Banc of America Securities, is well positioned to grow the business. "While my competitors are thinking about how to shrink, I'm looking to build," he says.
Sandelman, who was promoted to the post of global head of securities in June, got a list of those areas of the business that he regards as the sweet spots: prime brokerage, equity derivatives (his own speciality), convertible bonds and programme trading.
Across the industry many of his counterparts are concentrating their resources on the same products now that they're all convinced that the heady equity capital raising days of the late 1990s are not coming back. "It's like the ice age," says Rafi Berber, global head of the equity-linked group at Merrill Lynch. "No-one wants to be a mammoth. Everyone's heading south, looking for warmer climes."
Unlike in the 1990s, few equity firms believe they must be in all products and all regions.