Keep the Banking System Whole
As new revelations of Wall Street research analysts' cozy relationship with investment banking continue to emerge, it seems time to examine why these relationships developed in the first place. All the intermingling has been well-documented by the regulators, who are now intent on forever separating the two functions.
Many crossed the line during the tech bubble -- enthralled more by their ability to achieve rock star status than the integrity of their opinions. But amidst the fog of intrigue and dirty details, we've forgotten much of our basic history: Research's close relationship with banking predated the tech/telecom banking bubble by nearly a decade.
The system is often portrayed to have evolved somewhat haphazardly, spurred to its current state by a sloppy system of misguided incentives. The truth is far different: The relationship between research and investment banking was designed to deliver content to corporate clients. The destruction of the organization that produced this content threatens to further commoditize Wall Street's value to clients and will lead to continued job losses and profit declines.
A bit of perspective is useful. In an era characterized by bull markets, the '90s supported a build up of Wall Street's knowledge engines. Record numbers of research analysts were hired and paired off against industry-specialized investment bankers. By specializing coverage, bankers got smarter on industry issues and could more naturally face off against both clients and their counterparts in research.
The results were palpable. Corporate clients reported increases in the quality of the advice they were receiving and attributed high importance to specialized coverage, particularly in technical industries with steep learning curves. Research analysts played a critical content role on these industry-based teams in valuing companies, providing their imprimatur to investors, and in turn, offering objective positioning and pricing guidance to bankers given their knowledge of companies in the sector they covered.
The impending era of regulatory separation and the recent downturn in banking deal-making threatens the knowledge that these teams collectively delivered to clients. The damage will be done not so much by the fact that all communication between analysts and bankers will need to be chaperoned by an army of lawyers -- although this will be hard enough -- but by the likelihood that banking will no longer have the incentive to pay the freight for research.
Make no mistake about it: In the '90s, deal-making heavily influenced the profit models of Wall Street. A company -- covered by banking, and in research -- which made a market generated up to 20 times the contribution of a loosely covered company. So, banking could afford to fund a significant portion of research costs.
Changes are already being felt across Wall Street as banking, research and trading coverage is being radically reduced. The Securities Industry Association, the lobby group for the industry, reports that securities employment in New York City is off nearly 20% from its peak in 2001, with cuts continuing into the current quarter. Smith Barney -- one of the firms at the center of the research controversy -- recently announced that it has cut its research coverage across eight sectors, bringing its total company coverage down by 700 companies since 2001.
These changes are beginning to be felt by clients. According to a recent survey by Greenwich Associates, an industry consultancy, 85% of CFOs of middle market companies report that they are not seeing their bankers often enough.
These cuts may end up feeding on themselves. As the content delivered to clients weakens, banks will increasingly need to depend on the more commoditized services they provide, notably capital and trade execution. Deals will be heavily competed where winning will come at a cost to margins. Unless bankers bring a point of view to defend their recommendations, merger and acquisition advice may well degenerate into a competitive bid business.
The question isn't whether or not the industry is in need of reform. Investment banks have depended too heavily on loosely supervised producers doing the right thing while serving interests that, by definition, conflict. Raising the most money for a corporate client will always be at odds with picking the best value for investors.
The knowledge delivered by research has always moderated this conflict. Regulators and Wall Street management intent on cost cutting during the current downturn should take care not to throw out valuable content along with the research.
美国的投行体系能否保全?
随著华尔街股票分析师与投资银行之间的暧昧关系不断被曝光,现在是时候研究一下这种关系形成的根本原因了。
所有这些牵扯不清的关系都被政府监管当局详细记录在案,现在,监管者准备将两者的功能永久性地分离开来。
在科技股泡沫时期,许多分析师的行为越过了雷池──他们沉醉于自己能将股票捧成明星股的能力,而忽略了自身研究报告的诚实性。然而,在阴谋陷阱和肮脏交易的重重迷雾之中,我们忘记了一个基本的事实:早在科技/电信泡沫出现之前,分析师与投资银行家的密切关系已经存在近十年了。
人们常常认为证券市场发展到这一步带有一定的随机性,是企业错误的动机机制酿成了目前的局面。然而真相远非如此简单:之所以将股票研究部门与投资银行部门结合在一起,就是为了向企业客户提供服务。一旦这种结构遭到破坏,华尔街在客户心目中的价值将进一步贬低,并将导致持续的裁员及利润下滑。 有必要对此问题作进一步研究。90年代的牛市造就了华尔街的知识引擎。股票分析师的数目达到前所未有的水平,他们与数量相当的专注于某一行业的投资银行家相互协作。通过集中精力研究专一领域,投资银行家在行业问题上的见解更为独到,在应对客户和其他研究机构时也更加游刃有余。 结果显而易见。企业客户发现投资银行家所提供的咨询建议质量不断提高,并高度重视行业研究报告,尤其是在迅速崛起的高科技领域。分析师在评估公司价值方面扮演至关重要的角色,为投资者提供投资建议,同时也向该领域的投资银行家提供客观的定位和定价指导。
随著监管者要求两者功能分离,加上近期银行交易业务的冷清,投资银行家和分析师共同提供上述咨询服务的能力受到威胁。这不仅仅是因为分析师和投资银行家之间的所有沟通都必须受到一群律师的监督──这已经够难的了,更要命的是,投资银行部门很可能不愿再为分析师的研究经费付帐。 必须牢记的是:在90年代,投资银行交易深刻影响著华尔街的盈利模式。一个由投资银行家和分析师共同包装推向市场的公司,其在股市吸引的投资是一个不太受分析师关注的普通上市公司的20倍。因此,投资银行家才负担得起研究成本的一大部份。
由于由于投资银行、市场研究和股市交易的报导急剧下降,华尔街早已感受到了变化。根据行业游说组织"美国证券行业协会"(Securities Industry Association)的报告,纽约市的证券业职位与2001年的高峰期相比减少了20%,而且裁员的势头一直持续到当前的季度。处于丑闻风暴中心的美邦公司(Smith Barney)最近宣布,将削减在8个类股领域的研究范围,所追踪的公司数目将比2001年减少700家。
客户方面也开始感到这些变化。行业咨询公司Greenwich Associates最近的一个调查表明,中型股公司中85%的首席财务官表示,公司的投资银行家与他们见面的次数不够多。
目前的裁员可能最终导致更多的裁员。由于向客户提供的咨询服务减少,投资银行将越来越多地倚赖更为商品化的服务,如资本和交易执行等。交易业务的竞争将日益激烈,投资银行要赢得交易将不得不牺牲一部分利润。除非投资银行家能为其咨询建议提供有力支持,否则并购咨询服务很可能将退化为简单的竞标。
问题在于,证券行业是否需要改革。投资银行业过于依赖分析师,虽然这些分析师缺乏足够的监管,并向存在利益冲突的两方同时提供服务--是为企业客户筹集最多的资金,还是为投资者选择最佳的投资对象,这两者永远是相互冲突的。
研究工作的成果始终是这对矛盾的调和剂。在目前低迷的市场状况下,政府监管机构和华尔街管理层希望压缩成本亦无可厚非,但小心别在减少股评的同时把宝贵的研究内容也丢掉了。
本文作者彼得-戴维斯(Peter C. Davis)是Novantas, LLC公司的执行董事。