Not bashing, just want to know the "financial experts" on the board think:Jefferies Debt-Trading Revenue Plunges 73% on Distressed Losses
By Elizabeth Dexheimer Dec 16, 2014 6:06 AM PT 0 Comments Email Print
Jefferies Group reported a 73 percent drop in fourth-quarter revenue from fixed-income trading as the firm sustained losses on distressed debt, including Fannie Mae and Freddie Mac securities.
The investment bank, owned by Leucadia National Corp. (LUK), is also exploring alternatives for its Bache commodities business after a goodwill writedown contributed to a $92.4 million loss for the fiscal fourth quarter ended Nov. 30, the New York-based company said today in a statement.
“We experienced a very challenging fourth quarter,” Chief Executive Officer Richard Handler, 53, said in the statement. “Despite these results and our decision in respect of pursuing strategic alternatives for our Bache business, we believe Jefferies’s prospects for 2015 are solid, with our investment-banking backlog currently robust, and an expectation of more normal trading markets.”
Analysts and investors often watch Jefferies’s results for signs of how larger Wall Street firms such as Goldman Sachs Group Inc. and Morgan Stanley (MS) will fare. Those banks report fourth-quarter results in January. The CEOs of Bank of America Corp. and Citigroup Inc. said at a conference on Dec. 9 that they expect trading revenue to drop in the fourth quarter.
Jefferies’s net revenue declined 43 percent to $537.6 million from the prior year as fixed-income fell to $61.4 million. Revenue from the equity-trading business declined 45 percent to $158.5 million.
Fixed income was affected by heightened volatility starting in September and a tepid trading environment that led to mark-to-market writedowns, the firm said. The bank reported $55 million in negative revenue from distressed trading following a slump in those markets, it said.
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