Macquarie Sees Second Securities Loss From ‘Tough’ Market

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Macquarie Group CEO Nicholas Moore
Nicholas Moore, chief executive officer of Macquarie Group Ltd. Photographer: Ian Waldie/Bloomberg

Macquarie Group Ltd., Australia’s biggest investment bank, said its securities unit will probably post a loss for a second consecutive year as Europe’s debt crisis dents investor appetite for trading and share sales.

Macquarie Securities “is unlikely to be profitable” if market conditions persist for the year ending March 31, 2013, the bank said in a statement today before its annual shareholder meeting in Sydney. Macquarie reiterated a forecast that the group’s result will improve from the prior 12 months.

“The securities group is suffering,” Chief Executive Officer Nicholas Moore said on a conference call with reporters. “You know the drought will turn, but you don’t know when.”

Describing the market as “very, very tough,” Moore said he’s not expecting the European crisis to improve any time soon. To offset the volatility, Macquarie is vying to buy the asset management business of Brussels-based Dexia SA, according to people with knowledge of the matter.

Macquarie shares today fell 1.8 percent to A$23.87 at the Sydney close, trimming the year’s gain to 0.3 percent. The benchmark S&P/ASX 200 index dropped 0.2 percent.

Macquarie Securities posted a A$194 million ($198 million) loss last financial year. The unit employed 1,187 staff as of March 31, compared with a group total of about 14,200.

‘Weak Conditions’

While Macquarie’s overall earnings in the three months to June 30 improved from the year-earlier period, they fell from the previous three months, the bank said.

“Capital markets businesses continue to be impacted by weak market conditions,” Moore said in the bank’s statement.

Macquarie Capital, which advises on takeovers, completed 99 deals valued at A$19 billion, a decline of 23 percent from the first quarter of last financial year.

Profit at Macquarie in the year ended March 31, 2012, fell 24 percent to A$730 million as economic uncertainty weighed on the units that trade securities, manage share sales and advise on takeovers.

While Moore declined to comment specifically on the sale of Dexia’s asset-management business, he said funds management is attractive.

“We do like the funds management industry,” he told reporters. “If we find businesses that will enhance what we have, we do have the funding to actually step up.”

Macquarie’s group capital of A$12.4 billion is A$3.5 billion more than the minimum regulatory requirement, according to today’s statement.

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