BNP to Cut Most Asia Equities Research Team, Use Morningstar Instead
BNP to Cut Most Asia Equities Research Team, Use Morningstar Instead
(Bloomberg) -- BNP Paribas SA will cut the bulk of its Asia equity research team in Hong Kong and Singapore and instead use content from Morningstar Inc., people familiar with the matter said, a sign of how tougher global regulations are forcing banks to change their business models.
About a dozen analysts in those locations will leave as part of the move by Paris-based BNP, said one of the people, who asked not to be identified because the staffing changes aren’t public. Five analysts will stay and cover macro and sector research for the region excluding India, the person said. BNP on Thursday confirmed the agreement with Morningstar without giving details on jobs cuts.
Media representatives at BNP and Morningstar declined to comment on staffing.
The tie-up with Morningstar would be among the biggest changes to research in Asia in recent years, and is partly due to pressures brought about by European regulations known as MiFID II. The rules put a price on analyst work such as publications, models and ratings, meaning that offerings previously bundled together with trading commissions were exposed to market forces. The rise of passive investing has also hurt demand for stock-specific analysis.
Morningstar will track about 150 stocks in China, Hong Kong, Singapore, Korea and Taiwan across sectors including financials, real estate, consumer and energy, BNP said in a statement on Thursday. The agreement will bring the bank’s coverage in the region to around 330 stocks, including India, where it will continue with in-house research, according to the statement.
This would be the first relationship of its kind for Morningstar in Asia, Lorraine Tan, Morningstar’s director of equity research for the region, said in the statement.
Given recent changes in regulatory and market conditions, the tie-up allows BNP to create a scalable model for the region, BNP said in the statement. The five-year tie up will start in September, the people familiar said. This week’s changes will reduce BNP’s Asia cash equities team to about 65 people, according to one of the people.
The French bank cut a third of its 15-member cash equities team in Japan to focus on other areas including derivatives and execution, a person with knowledge of the matter said earlier this week.
Morningstar has about 19 equities analysts in Hong Kong, Shenzhen, Singapore and Tokyo and plans to add six more, according to one of the people. The firm covers more than 230 companies in Asia, the person said.
--With assistance from Justina Lee and Cindy Wang.
To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net;Alfred Liu in Hong Kong at aliu226@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Candice Zachariahs
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