to announce sweeping
K A Anantharam
18 December 2000
investment banks grapple with profit warnings arising from the
end of a two-year boom, fuelled by investor appetite for IPOs
and junk bond deals, Prudential Securities has announced sweeping
changes that could spell the beginning of similar drastic measures
from the industry.
bracket firms like Goldman Sachs and Morgan Stanley continuing
to dominate deals in a shrinking market, smaller players like
Prudential Securities have no option but to resort to drastic
the financial services arm of Prudential Insurance, has been
pursuing a strategic revamp since October last year, which began
with the appointment of John Strangfeld as the new chief executive.
It is expected that the firm would axe almost 75 per cent of
its investment banking staff, thus ending its attempts to originate
This comes close
on the heels of the closure of the firms institutional
bond trading unit which saw a loss of 400 jobs. The balance
of the staff may be used as distribution agents to channel business
generated by other financial services companies through Prudentials
large broking network.
which has been acquiring boutique banks in the recent past to
build its presence in a number of markets, has been overtaken
by the dramatic and sweeping consolidation in the financial
services industry that have made it harder to compete on size.
By making these sweeping changes, Prudential could be effectively
signalling the end of its efforts to become a 'bulge bracket'
diversified investment banker.
Under the new moves,
Prudential could well concentrate on its retail equity business
which is supported by a network of over 7,000 financial advisers
across many countries.
Mr Strangfeld also
said that the company would now focus on research in response
to the market demand for unfettered, investor-focused research.
move would make Prudential Securities the first major Wall Street
securities firm to use its research capability to primarily
serve its individual and institutional investors rather than
its investment bank.
reports on Prudential Securities