When Deutsche Bank AG announced its takeover of British investment bank Numis in April last year, some in the City of London wondered whether their cultures would mesh. A year on, changes are becoming visible.

Among the deal’s biggest consequences are tighter restrictions on how Numis bankers can interact with their firm’s stock analysts. 

Before the takeover, dealmakers in Numis’ London office needed only to climb a few stairs to speak with their colleagues in research, multiple people familiar with the matter said, declining to be identified discussing private information. 

As part of the integration, Deutsche Bank is moving Numis analysts into its new London office, according to an internal memo on Monday. Deutsche Bank is also combining its equity sales teams in the city, with 15 employees relocating to the Numis office next month. The new firm’s combined coverage of UK stocks will rise to about 340 companies from 270, the memo said.

Most major investment banks have to strictly separate their research and advisory departments, but the rule doesn’t apply in the same way to London’s various independent, mid-market-focused players.

While Numis bankers understood that change was coming, some say they have lost a key advantage in the fierce competition for mandates from companies listed on the UK’s shrinking stock market. A Deutsche Numis representative confirmed the contents of the memo. 

The episode highlights the challenges global banks face when acquiring boutique firms, whose cultures are often more freewheeling. Failure to manage that brings risks including a loss of talent and, ultimately, clients. 

For over a decade, Numis had been the most prominent stand-alone name among the 80 or so firms that shepherd companies through their interactions with investors in the UK capital - a position known as the corporate broker. Its takeover by Deutsche Bank for £410 million (US$512 million or RM2.45 billion) was the first major deal for the German lender’s chief executive officer Christian Sewing. 

The move emulated JPMorgan Chase & Co, which bought storied City firm Cazenove & Co in 2010, and continues to dominate broking. 

There’s been persistent speculation about whether, and when, Deutsche Bank will cut investment-banking roles given the still dormant market for initial public offerings and an investor exodus from UK stocks. 

Some smaller Numis clients, meanwhile, have been eyeing new corporate brokers because they want the increased attention that comes with an adviser that isn’t part of a global investment bank, Bloomberg News has reported. 

To be sure, Numis bankers have also felt the benefit of its new parent’s balance sheet capabilities. The broker last year acted as a main coordinator for Zegona Communications plc’s €300 million (US$322 million or RM1.53 billion) equity raise to help fund its acquisition of Vodafone Group plc’s Spanish unit.

Deutsche Numis had the second-biggest base of broking clients in February, according to data provider ARL, but ranked behind Wall Street competitors like Morgan Stanley and JPMorgan Cazenove in terms of companies’ market value.

Deutsche Bank last week reported a 54% jump in overall revenue from advising on deals and stock and bond sales in the first quarter, which helped offset a slowdown in income from lending. 

  - Bloomberg