Waning research options a worry

Concerns have been raised that the departure of Goldman Sachs and Deutsche Bank from New Zealand could affect the quality of research on offer to fund managers here.

Tuesday, November 10th 2015, 6:00AM

by Susan Edmunds

Deutsche Bank is closing its operation in New Zealand as part of a global move that will lead to the loss of 35,000 staff.

It had 29 Auckland staff working in fixed income and business support roles. Kiwi clients will be services from Australia.

Goldman Sachs is also looking to shift its securities business to Sydney.

That has raised concerns about a loss of bond market liquidity.

Rebecca Thomas, of Mint Asset Management, said the moves were commercially logical.

“We are already over-broked, we have a number of brokers who call on us as an institutional client. It’s commercial economics that if there isn’t enough volume of business to go around, people operate on reduced desks for some time with the headcount down because they haven’t replaced people - it becomes no longer a viable proposition. That’s understandable.”

She said many key Deutsche Bank staff had already transitioned to Craigs Investment Partners, which is part-owned by the bank, so their capabilities would not be lost to the New Zealand market.

But she said the move to offer research out of Sydney instead of Auckland could have a bigger impact.

She said it was important to fund managers that there was strong local research capacity and that analysts were highly-qualified and well-trained. “We rely on good third-party research as part of our idea generation. where that’s disappearing we will miss that.”

Other research options have dwindled as Morningstar shifted its research business across the Tasman and Van Eyk and Lonsec left the Kiwi market. FundSource left the qualitative research market this year but last month announced a new deal with Research IP to start again.

Goldman Sachs has a stake in JBWere, which is also owned by BNZ”s parent company National Australia Bank. JBWere works closely with BNZ’S private bank.

A spokeswoman said the move did not affect the BNZ operation.

Thomas said provided research continued to be done from Sydney, changes as the result of the moves would not be dramatic.

Tags: Deutsche Bank goldman sachs Rebecca Thomas