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Jefferies in Growth Mode; Credit Suisse Trouble on the Horizon?

Often, the best job prospects are at the also-rans looking to position themselves as a top-tier player. Jefferies is determined to be in the big leagues, and recent moves are making it clear that the investment firm will most likely continue division beef ups and strategic acquisitions to accomplish its goal.

The firm recently announced it is buying Prudential Bache's sizeable and established global commodities business. Between a ton of many other expansions and the big time pilfering of its competitor's top execs, the folks at Jefferies have been very busy. Additional spots on the equity electronic trading and fixed income side are probably a good bet, given the market interest in both.

While things are pointing up at Jefferies, news developments are signaling trouble ahead for Credit Suisse. The Swiss bank announced first quarter net income fell a whopping 45 percent from the period a year earlier.

Credit Suisse is going to be playing some serious catch-up to recover, and it couldn't be at a worst time. The new Swiss draft ruling that pushes stricter capital requirements on big banks is going to make things tougher for the bank, as well as for UBS. 2010 was already a big year of layoffs for Credit Suisse. This new double whammy just may be the impetus for more cuts.

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AUTHORMyra Thomas Insider Comment
  • Pu
    Puresearch
    30 May 2011

    I think you may want to look at the ROE of JEF and CS side by side and make a determination as to who runs a better business or who is playing catch up. JEF is spending so much money buying talent that they don't have an ROE to speak of, meanwhile CS is at 19% underlying. CS has 3x the average market share that JEF has in their core businesses: equities, M&A, levfin, not to mention a $2bln + prime brokerage business and the highest rated private banking business in the world which just attracted almost $20b in net flows in Q1. Who's catching up to whom?

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