UBS still number one in equity trading as Barrenjoey ramps up

The Swiss bank has remained at the top of the leaderboard in secondary trading in 2021 despite losing a spate of key bankers to Magellan-backed Barrenjoey Capital.

Brokers expect to see more volatility in 2022, which can be good for business. Picture: NCA NewsWire / Gaye Gerard

UBS has remained at the top of the leaderboard in Australian equity trading in 2021 despite losing a bunch of key bankers to Magellan-backed Barrenjoey Capital, which just squeezed into the top 20 list.

The Swiss investment bank last year accounted for just over 16 per cent of the total number of shares traded in the secondary market, Iress data shows. That’s slightly up on 15.9 per cent in 2020.

Next in line is Credit Suisse with a 10.5 per cent market share, down on the previous year’s 11.4 per cent, followed by Morgan Stanley, which was broadly unchanged at just over 9 per cent.

Macquarie came in at fourth place with a market share of 7.5 per cent, while CommSec held ninth position at 5 per cent.

But it is Barrenjoey that has kept the local industry on its toes after Australia’s newest investment bank went on a hiring spree over the past 18 months, poaching a string of bankers, analysts and traders, most notably from UBS.

Matthew Grounds. Picture: Jane Dempster

Key hires included Matthew Grounds, often dubbed a “rock star banker” and formerly head of UBS in Australia, Guy Fowler, who was head of corporate finance, Chris Williams, who ran UBS’s leading company research business, and renowned equities block trader George Kannan.

Barrenjoey eked out a market share of just 0.8 per cent in 2021 after launching its equity business in June.

But it is still in the process of building out its operations, having hired more than 60 people across 20 firms.

Barrenjoey has also ramped up its stock coverage and an electronic trading offering is flagged by year’s end.

Chris Williams. Picture: AAP

“We intend to be a full service equities business,” said Barrenjoey head of equities Chris Williams in an interview. “Many of the building blocks are now in place.

“Our equities research team is almost entirely in place and stock coverage has grown to 125 stocks.

“We expect that to be in excess of 200 by year end.”

Some of the more recent hires include equity strategist Damien Bowey, who is joining from Credit Suisse, and chief economist Jo Masters, who will join from EY.

In the last week it has made four more appointments to the business.

UBS has not sat idle, and is said to have filled almost all the roles lost to Barrenjoey and others, including Jarden Australia.

Guy Fowler. Picture: Renee Nowytarger

In 2021, UBS hired 120 people, including at least 10 senior analysts, and is looking to hire more as it builds out its ESG offering.

It also initiated research on 60 stocks, taking the total number of companies under coverage to just short of 200 at the end of last year.

UBS has long dominated the Australian market in secondary trading, taking over after Deutsche Bank held that position in 2014.

That is also coincidentally when Mr Williams took over the Swiss bank’s equities business.

Former colleague Clinton Wong, now co-head of UBS’s equities business, said that while the bank’s key positions were now accounted for, it was still investing across the business, including in specialist sales and derivatives.

“There has been reasonable change across the industry with a couple of new entrants into the market,” Mr Wong said.

“They are credible and well-resourced but we are and will continue to ensure that we are the best-resourced service provider for our clients and compete on that basis.

“Our research platform was significantly depleted for the majority of last year.

“So 2022 will be a much different year for us. We are looking to provide our clients with the best service on the street and we have got the resources to do that – locally and globally. That’s our mission for this year.”

The competition for business in the heavily brokered Australian market comes against a backdrop of an equity market that has faced challenges as the Covid-19 Omicron variant spread around the world and as central banks look to tighten monetary policy amid concerns about runaway inflation.

Both UBS and Barrenjoey expect to see more volatility in 2022 as traders weigh the impact of the pandemic, the outlook for interest rates, and a federal election, all of which can only be good for business.

Last year was also an eventful one for one of Barrenjoey’s key backers Magellan, which owns 40 per cent of the investment bank. Its shares tanked after the troubled fund manager lost a key mandate from client St James’s Place, responsible for about 12 per cent of revenue.

For Barrenjoey, it is still business has usual with all of the capital and funding arrangements said to be in place. British lender Barclays also owns a 9.9 per cent stake in the firm.