The New York Times reports that Société Générale Private Banking said Wednesday that it had hired Copal Partners, a financial research outsourcing company, to analyze stocks for its private wealth clients. Copal Partners, which has the bulk of its 1,200 employees in Delhi, but also has analysts in Beijing and Buenos Aires, will do research and write reports on about 200 companies, including many in emerging markets. These reports will be co-branded with the bank’s name and Copal’s. Copal Partners’ analysts will also do tailor-made research at private banking clients’ request.
As the NYT notes, investment banks have been using KPO firms to bolster their equity research capabilities for some time now. Some of the other players in this space include Amba Research, Evalueserve, and Irevna. The role played by the KPO firms can extend from acting as outsourced call centers to carry out primary research projects to advanced model building and report writing. However, until now, in almost all cases, these firms stayed well in the background. Sell side analysts would use the data, models, and research generated by the KPO firms and incorporate this into their own reports, or at least rebrand them.
What is interesting about this SocGen deal is that the reports will be co-branded with the bank’s name and Copal’s. SocGen benefits insofar as they can use Copal’s analysts to fill in gaps in its own coverage, which had “some weaknesses in Latin America, in India and in Eastern Europe,” according to Edouard Camblain, global chief of equity research at the bank. As the cost of hiring an analyst is considerably lower in India than in Europe or North America, Copal’s capabilities make it much easier for SocGen to provide coverage of these area without unduly increasing costs. Copal Partners’ analysts will also do tailor-made research at private banking clients’ request.
It remains to be seen how much value SocGen private banking clients derive from this equity research service, and whether we will see other wealth managers take steps to provide low-cost, bespoke research capabilities to clients.