ScotiaBank sign outside Bank of Nova Scotia building at King St. West and Bay St. in downtown Toronto on March 12 2013.Fred Lum/The Globe and Mail
Bank of Nova Scotia has hired financial services analyst Sumit Malhotra away from Macquarie Group, marking the third time in recent months that a highly-ranked analyst from an independent has switched to a job at one of Canada's big banks.
Mr. Malhotra joined Macquarie in 2009 from Merrill Lynch's Canadian unit. Prior to that he worked at Genuity Capital Markets, and early in his career he worked at Scotiabank in trading risk management.
His move follows the departure of Mario Mendonca from Canaccord Genuity to join Toronto-Dominion Bank's securities unit, and Darko Mihelic's move from Cormark Securities to Royal Bank of Canada's securities business.
All three were among the top-ranked analysts covering the bank sector, but the economics of the business right now made it difficult for the boutiques where they worked to retain them.
Budgets are constrained at smaller investment dealers in current markets, with equity trading volumes down and investment banking business soft for the smaller companies that boutiques tend to cover. That has given the bigger bank-owned securities dealers an advantage when recruiting as they look to revamp their financial services coverage.
Scotiabank said that Kevin Choquette, who had covered banks there for 15 years, is leaving the company.
"To ensure top tier research coverage in Canada, Sumit Malhotra will be joining Scotiabank GBM [Global Banking and Markets] as managing director in our Toronto office, covering Canadian banks, life insurance and brokerage companies," Scotiabank said in an internal announcement of his hiring.
Now, the boutiques must decide how they want to cover financial services, having lost their big name analysts. They can try to pay up to get another well known name, try to groom a replacement by installing a younger, cheaper person in the role, or look at dropping coverage of financial services altogether.
Canaccord has yet to name a replacement for Mr. Mendonca, but the firm has clearly been looking. Cormark put Meny Grauman, who had been an associate bank analyst at Canadian Imperial Bank of Commerce, in the role.