Anglo American dumps UBS for Morgan Stanley
MINING giant Anglo American has hired US investment bank Morgan Stanley as its second corporate broker, the firm said yesterday.
The UK-listed firm dropped Swiss bank UBS as a broker after 14 years with the bank, in favour of the American advisors.
Morgan Stanley joins Goldman Sachs as the FTSE 100 company’s second broker.
Corporate broking is not a profitable business in itself – for a nominal fee, the investment bank advises the firm on market conditions and its share price.
The payoff is expected to come when the company wants to raise funds by issuing debt or shares, or engage in other activity like mergers and acquisitions.
The corporate broker then hopes its close relationship with the business lands it a key role on the deal – though that lucrative position is not guaranteed.
Although the profits are not certain, there is still always tight competition to be appointed as a corporate broker.
Typically rival banks will put as much effort into advising the client as its brokers do, sending unsolicited advice and analysis in the hope of winning the company’s contract.