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Scandinavian banks plan sponsored equity research to recover losses

Banks in Scandinavia are planning to offer research reports sponsored by listed companies in order to compensate for losses associated with new market rules, Bloomberg News reported Feb. 22.

Europe's second Markets in Financial Instruments Directive is increasing pressures on the traditional business of providing equity research, which previously often came combined with other services that clients got in return for paying trading commissions.

Banks are now obliged to show the break-down of their research costs under the new regulations and clients have to pay for reports separately.

Norway's DNB ASA is set to offer its first sponsored research sometime after April 1, DNB Markets Inc.'s head of equities Alexander Opstad told Bloomberg. He said DNB would be covering a "handful" of companies by the end of 2018. It will make clear which company paid for the research and will not give traditional buy-sell-hold recommendations.

Sweden's Skandinaviska Enskilda Banken AB and Nordea Bank AB (publ) are among other Scandinavian banks planning or providing sponsored research, the newswire noted.