Jefferies Said to Cut Up to 40 Positions in Hong Kong, China

  • Firm said to refocus on mergers and equity capital markets
  • Investment bank reported drop in fixed-income revenue

Jefferies Group, the investment bank that reported slumping trading revenue this week, is cutting as many as 40 positions in China and Hong Kong as it refocuses on advisory businesses, said people with knowledge of the matter.

The New York-based bank plans to eliminate 30 to 40 positions across research, sales and trading, said the people, who asked not to be identified because the details aren’t public. Discussions on the cutbacks have already started, the people said.

Jefferies, which is owned by Leucadia National Corp., reported a 36 percent drop in fourth-quarter revenue from trading stocks and bonds as fixed-income sank for a fourth straight quarter, the company said Dec. 15. Investors watch Jefferies’s results for clues about trading at the bigger investment banks, which report results a month later.

A spokeswoman for Jefferies in London declined to comment.

Several banks have expressed doubts about how quickly the bond-trading business will bounce back after revenue fell by more than half since 2009, though JPMorgan Chase & Co. Chief Financial Officer Marianne Lake said an increase in interest rates could benefit those businesses next year.

Jefferies expects its fixed-income business to return to “normal profitability” in 2016, and is taking steps to reduce volatility and risk, Chief Executive Officer Richard Handler said on Tuesday. The company reduced its balance sheet by $6 billion from the end of last year to $38.5 billion, and dropped its leverage to the lowest level in about seven years. Overall income from investment banking rose 18 percent to $372.9 million, led by Jefferies’s advisory business.

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