Unfixed income

20 September 2011 By Antony Currie Follow @AntonyMCurrie

Rather than punish the growing investment bank for its 85 pct crash in Q3 debt trading revenue, the market shrugged. True, a tough quarter was expected. But such nonchalance about this and JPMorgan’s earlier warning implies investors reckon fixed income will suffer for some time.

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Jefferies Group reported third-quarter net income of $68 million, or 30 cents a share. The acquisition of Bache was a large contributor to the quarter: the commodities, derivatives and foreign exchange broker contributed 20 cents to earnings, mostly thanks to a $52.5 million tax-free bargain purchase gain. This accounting-related gain stemmed from Jefferies paying less than the value of all Bache’s tangible and intangible assets.

Underwriting revenue rose 1.5 percent from the second quarter to $186 million, M&A advisory fell by a quarter to $107 million, equities trading fell 22 percent to $127 million and fixed-income trading fell 85 percent.

Jefferies also announced that the board of directors had approved a share repurchase program to back up to 20 million shares from time to time. The firm bought back 3.1 million shares in the three months to August.

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