Ghostly touch to finance research

In one of the Sri Lankan capital's few skyscrapers, a battery of analysts is crunching numbers and writing equity research reports. But they won't put their name on them.

Ghost writers of international finance, the young analysts at Amba Research work in complete anonymity for the world's biggest investment banks and for a third or less of the cost of a junior analyst in New York, London or Hong Kong.

Amba Research, set up in Colombo in 2003 by four former directors of equity research at banks including Deutsche Bank, JPMorgan and Goldman Sachs, is the most specialised in a series of players in the small but fast-growing field of investment research outsourcing.

"At a cost of one-third to half of an onshore analyst, our clients get 75 to 80 per cent of the functionality," Amba co-founder Brad West said.

Amba hires young accountants or MBAs in Sri Lanka and India, puts them through a five-week equity analysis course and subcontracts its staff on a one-year basis to clients.

Firms like Amba pay their analysts US$10,000 ($14,837) to US$25,000 a year and charge their clients upwards of US$50,000. That compares with a total cost of US$150,000 to US$250,000 for a junior analyst on Wall St or in London.

The head of research at a European bank that makes extensive use of firms like Amba said that outsourced analysts typically did not work on deal research, communicate with clients or corporates, or publish research under their own name.

"But they can produce publishable work. Sometimes they write the whole report and our analyst just puts his name on it."

Amba says it works for more than half of the world's top 15 investment banks and a string of hedge funds. But the banks are not eager to admit they outsource research, as they worry about perceptions of research quality and job security.

"They would rather admit to income tax evasion," West said.

The secrecy works both ways. Amba clients had codenames and "to talk about who your client is, is a firing offence", he said.

- REUTERS