Jefferies released its second quarter results yesterday, and they weren’t at all bad. Net earnings in the first six months of 2024 were up 125%; investment banking and capital markets revenues were up 29% over the period; equity and debt underwriting revenues rose 69% and 130% respectively. In investment banking, there’s talk of rising market share. CEO Richard Handler and president Brian Friedman jointly declared that they feel “very positive” about the future.
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Beneath the surface, though, a few changes may be afoot. Financial News notes that Jefferies quietly said goodbye to 150 people in the second quarter after last year’s managing director hiring spree, although these were largely attributed to the sale of a subsidiary. Jefferies’ fixed income salespeople and traders underperformed its other businesses in Q2, with fixed income trading revenues up only 2%, while equities sales and trading revenues were up 46%.
Some of the bank’s senior traders have left for hedge funds, and a recent disclosure suggests Jefferies has changed the structure of its London bonuses.
Sean Hammersley, a managing director and co-head of Jefferies’ convertible bond team, has left to join hedge fund Balyasny. Hammersley left this month, according to his LinkedIn profile. He joined Jefferies from Deutsche Bank during the German bank’s travails of 2019.
In the US, Daniel Bruen, a senior vice president in equities trading at Jefferies joined Millennium last month.
The exits come as Jefferies has altered the structure of its bonuses in London. Jefferies has long been known for paying all-cash bonuses to employees and for clawing them back in varying proportions (plus income tax) if people leave within a few years of their receipt. In Europe, where senior people at large banks receive deferred stock as a result of regulations surrounding material risk takers, Jefferies’ bonus approach has long been a point of differentiation.
Not any more. The most recent report for Jefferies International, which employs 1,000 people in London, says that the bank has in fact been covered by IFPR, a new prudential regime for MiFID investment firms, since 2022. This regime specifies that a “certain amount of variable remuneration for material risk takers” must “be paid in non-cash instruments and have a deferral element.” As a result, Jefferies said in March 2024 that it “amended the remuneration structures for those employees identified as material risk takers for the year ending 30 November 2023.”
It’s not clear whether this change contributed to Hammersley’s decision to move on: he doesn’t appear to have been listed as a material risk taker with the FCA anyway. Jefferies declined to comment on the changes to its London bonuses, which may have been applied as sparingly as possible – one MD there said his bonus is still all cash, just as before.
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