Barclays Plc’s clients may have to pay as much as 350,000 pounds ($455,000) to get the top service package from its equities analysts once free research is banned in Europe, the first price for stocks coverage to emerge from a major bank.
The firm is proposing three levels of service — bronze, silver and gold — with the premium package comprising unlimited reports, field trips and “occasional” one-on-one meetings with analysts and corporate executives, according to a pricing document seen by Bloomberg News. At the bottom end of the scale, read-only access to European research will start at 30,000 pounds.
Prices in the document may not apply to all clients, have been in flux and could still be subject to change, a person familiar with the process said, asking not to be identified discussing the matter. A Barclays spokesman declined to comment.
Banks are scrambling as they enter the last six months before the decades-old practice of sending out free analyst reports as a courtesy and marketing strategy comes to an end. The European Union’s MiFID II regulations, enforced from Jan. 3, require money managers to separate the trading commissions they pay from investment-research fees. This means banks in turn have to be more transparent, providing specific charges for their analysts’ time and work in order to comply.
Barclays, which runs one of the world’s largest investment banks, is set to charge more than some smaller equities rivals. Alliance Bernstein LP’s sell-side unit has quoted some firms about $150,000 a year to access equity analyst reports and other basic services, people familiar with the negotiations said this month. Canaccord Genuity Group Inc.’s U.K. sell-side unit, which doesn’t produce fixed-income research, has proposed fees of as much as 75,000 pounds a year for full access.
More prices have emerged on the fixed-income side. Credit Agricole SA and Nomura Holdings Inc. are pitching as much as 120,000 euros ($140,000) a year for their premium credit and macro-economic research packages, Bloomberg News has reported. Some money managers have said they’re getting quoted $50,000 for a basic package from JPMorgan Chase & Co.’s fixed-income analysts.
At Barclays, even if clients stump up 350,000 pounds for the gold “trans-Atlantic” package, they could still end up spending more. “Bespoke” analyst work and corporate access is priced separately, according to the document. Field trips, industry events and company management meetings are also at the bank’s discretion, and analyst one-on-ones are “capped,” it shows.
In anticipation of the MiFID II upheaval, some top-ranked analysts are striking out alone, betting they can make more money selling their insights from a boutique. Barclays lost industrial and aerospace equity analysts Scott Davis, Carter Copeland and Rob Wertheimer last month, who resigned to start Melius Research LLC in New York. The firm is proposing to charge about $160,000 a year for their all-in option, people familiar with the plans said June 29.
McKinsey & Co. estimates investors will slash more than $1 billion of spending as they become pickier about what they pay for, with most only willing to fork out for analysts with the best track records. This may force banks to shrink or eliminate their research arms, potentially triggering hundreds of job losses.
Morgan Stanley Chief Financial Officer Jonathan Pruzan said this week that the world’s biggest investment banks will emerge as winners from MiFID II, arguing asset managers may opt to funnel their budgets to fewer investment banks, aiming to maintain the high levels of service that firms get for doing a lot of business.
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