Much has been made of the fact that Brexit could lead big German banks (like Deutsche) to pull back from London and relocate trading desks to Frankfurt. Far less has been said about the other possibility: that Brexit could encourage small European players without a UK presence to open new City outposts. At first sight, this appears to be what's happening at Germany's Goetzpartners.
Earlier this year, the Munich-based independent bank hired Martin Brunninger, formerly a managing director at Jefferies in London, to lead its City equity research team. Now, Brunninger, says he's hiring.
"We already have five analysts in London," says Brunninger, an Austrian who's been in London for 15 years. "We're already strong in industrials and we expect to hire extra analysts for healthcare by the end of this year," he adds, declining to put a number on the new hires.
Goetzpartners' London expansion comes as banks like Jefferies and Exane boost London equity research teams too. Brunninger says it has less to do with Brexit than with strong demand for good research. "When I started in this industry 15 years ago, research was produced by big name analysts, but as the revenues earned by researchers became less and less banks started replacing their managing directors in research with associates," he says. Nowadays, he says demand for high calibre research is increasing in London.
This is partly due to MiFID II, which will compel clients to pay directly for research, but Brunninger says Goetzpartners already uses a different model to charge for its product. Half the research they produce is sold to the companies covered by the research.
Doesn't this lead to partiality? "We only cover companies we believe in," says Brunninger. "Our researchers really know their sectors - we are all ex-chemists and doctors and there is no such thing as unbiased research now anyway."
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