SocGen to Buy Jefferies Bache Clients in Derivatives Push

Updated on

Societe Generale SA, France’s second-biggest bank, agreed to take over most of the clients of Jefferies Group LLC’s Bache futures unit amid a push into derivatives.

Jefferies, which is owned by Leucadia National Corp., is closing down the rest of the business, according to a statement Thursday from the New York-based firm. SocGen will review Bache’s staff and may hire some, said a person with knowledge of the matter who asked not to be identified because the terms are confidential.

The purchase follows SocGen’s acquisition in January of a financial industrial-metals portfolio from Barclays Plc. The Paris-based bank in May took full ownership of derivatives brokerage Newedge to expand electronic trading and clearing operations as regulators push to boost transparency.

“This transfer is a good opportunity which allows us to cement our leadership in the rapidly growing sector of listed and” over-the-counter derivatives, Newedge Chief Executive Officer David Escoffier said in a statement.

For Jefferies, the deal ends a costly foray into futures trading. The bank, led by CEO Richard Handler, reached a deal in 2011 to buy Bache’s Global Commodities Group from life insurer Prudential Financial Inc. for about $430 million.

‘Strategic Alternatives’

Jefferies said in December that it was exploring “strategic alternatives” for Bache after a writedown in the business contributed to the investment bank’s quarterly loss. The bank said in Thursday’s statement that the deal and winding down the remaining business will result in a one-time cost of about $66 million, including severance pay.

Spokesmen for Jefferies and SocGen declined to comment on whether the French bank would hire traders from the Bache unit.

Jefferies also agreed to acquire Faros Trading LLC, the institutional foreign-exchange brokerage unit of FXCM Inc., the trading firm it bailed out in January, according to a separate statement Thursday that didn’t include terms.

Jefferies will merge its existing foreign-exchange business with Faros and that firm’s CEO, Ray Kamrath, will become Jefferies’s global head of foreign exchange, according to the statement.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE