Absa to take on more analysts to expand equities unit

ABSA plans to take on as many as six analysts this year as part of UK parent Barclays’s push to expand its equities unit after the purchase of Lehman Brothers’ brokerage.

“We’ve got about 20 people at the moment and will probably end with 25 or 26,” Stephen van Coller, CEO of Absa’s investment banking unit, Absa Capital, said yesterday.

“Barclays is looking at the whole equity idea. As they roll out the global equity business and look at Europe, the Middle East and Africa, you see Russia and SA make up 20% of the fee pool, so you must have them be top-ranked.”

Barclays, which bought Lehman’s US unit in 2008 after the New York-based firm filed the biggest bankruptcy in history, has since added more than 2 000 bankers in Europe and Asia as it expands its equities operations.

CEO Robert Diamond is seeking to expand in Africa to help meet his target of boosting return on equity to 13%. Barclays’s African operations posted a return on equity of 10% last year, more than the group’s 6,6%.

Absa Capital was not offering candidates signing-on bonuses or above-average salaries, Mr van Coller said. However, he said the lender will compensate analysts for deferred bonuses and stock options they accrued at their previous employers to encourage them to join.

The investment bank would cover about 70% of the JSE’s market value once the new hiring was completed, he said.

Barclays has already taken on analysts and bankers in SA, including former Citigroup head of equities in the country Quintus Kilbourn and Goldman Sachs’s Philip Lindop, who was named head of Africa investment banking last month.

Mamokete Lijane, a fixed-income analyst at Johannesburg-based Renaissance BJM Securities, this week resigned from the brokerage to join Absa Capital. Ms Lijane is SA’s top-rated analyst for coverage of fixed-interest securities, according to Johannesburg-based Financial Mail’s 2012 analyst rankings.

The number of equity research teams in SA has increased in the past 18 months, with firms including Macquarie, HSBC and SBG Securities, a unit of Standard Bank, adding to their research teams.

Some investors are concerned that too many analysts are chasing too little revenue. Bloomberg