J. Safra Sarasin, one of the last private banks in Switzerland to still offer its wealthy clients in-house stock research, closed the unit down at the end of April, according to research by finews.ch.
The move marks the end of an era for J. Safra Sarasin, which had long been noted for its independent research expertise as Bank Sarasin and later J. Safra Sarasin following the merger of the Swiss and Brazilian banks. J. Safra Sarasin confirmed that it had closed its stock research unit.
The bank didn't want to say why it shut the research. A spokesman simply noted that the bank will continue to offer economic, strategy, credit, fund and sustainability research after discontinuing its stock research.
Following a Trend
In other words: the bank in future will conduct research for its asset management only. Private customers won't receive an analysis about individual stocks. The analysts which provided the research for the private-banking business will be retained. Whether they will take up the offer of continued employment will have to be seen and past changes within the research department have prompted several analysts to leave.
Long-time J. Safra Sarasin analyst Rainer Skierka took early retirement from the bank in January, only to pop up later at independent analysis boutique Researchpartners.
In shutting the unit, J. Safra Sarasin follows a trend of smaller local brokerages such as Lombard Odier. Fundamental sell-side research, or analysis on company balance sheets and profit-and-loss statements to entice clients into stockpicking, is increasingly being shunned by banks.
Upheaval
Sarasin in 2007 had outsourced the sell-side research to the Neue Helvetische Bank, in which it held a stake. In the ensuing turbulence at Sarasin after its acquisition by Safra, some 40 bankers left to join Notenstein Privatbank. Amongst them numerous analysts in the sustainability unit. The then head of stock research, Peter Casanova, had to leave.
J. Safra Sarasin introduced two units for its research, one for private banking, the other for asset management. This decision has now been made redundant with the closure of the stock research unit. The bank is now employing some 15 analysts, working for the funds issued by the institute. It also retained the sustainability research.
What used to be a core competence of J. Safra Sarasin is but a shadow of itself, according to insiders. The best people left to join Notenstein, including Andreas Knoerzer, the head of the institutional business at the St. Gallen-based bank.
Under Cost-Cutting Scrutiny
Stock research is now rarely compiled by smaller private banks, which prefer instead to aggregate the research of larger banks. Notable exceptions in Switzerland are Bank Vontobel and niche players like Bank am Bellevue, Kepler Chevreux, Mainfirst Bank and Neue Helvetische Bank.
The traditional model of brokers pocketing commissions from selling their clients' stocks is largely over. Instead, private banks aim to offer holistic advisory services and investment ideas, in which stockpicking play a minor role. As a result, analyst teams such as J. Safra Sarasin’s are increasingly under cost-cutting scrutiny.
