Aug 17 Brown Brothers Harriman has closed a
business that allowed its institutional investor clients to
outsource aspects of their stock research to the bank, because
the operation was not bringing in enough revenue.
The bank is the latest to stumble in the world of research,
where investor clients are keen for information, but balk at
paying for it. Goldman Sachs Group Inc tried to make
money from selling research from analysts outside the bank, and
failed, recently shuttering the business.
In the case of Brown Brothers Harriman, the research
operation was separate from its investment banking unit or its
money management businesses. The privately held bank's roots go
back to the 19th century.
One source estimated that 10 to 20 staff members were
affected by the business's closure, but another said that only a
few analysts lost their jobs.
The bank followed an unusual path: it would research topics
or build valuation models that were specifically requested by
Brown Brothers Harriman's clients paid for its research
products either by funneling their trading business through the
bank, or by paying for the services a la carte.
Commissions from trading stocks have shrunk across Wall
Street, making it harder for trading volume to subsidize
research, Brown Brothers Harriman said in a statement.
The company said it is maintaining other trading services
beyond research that clients use.
Some customers lamented the demise of Brown Brothers
Harriman's research arm.
"They actually provided us with quantitative inputs that we
used in our stock selection models, so now we're kind of
scrambling to come up with another means of generating that
analysis," said Peter A. Sorrentino, a senior portfolio manager
at Huntington Asset Advisors, which was a client affected by the
The product was expensive, Sorrentino added.