Tags: Jefferies | Cuts | European | Holdings

Jefferies Makes More Cuts in European Holdings

Monday, 21 Nov 2011 12:28 PM

Jefferies Group Inc., the investment bank whose stock dropped in the wake of MF Global Holdings Ltd.’s bankruptcy, said it has again cut holdings in Greece, Ireland, Italy, Portugal and Spain.

“We have further reduced our total gross exposure to Greece, Ireland, Italy, Portugal and Spain by almost another 50 percent (for a total reduction of nearly 75 percent); and our net exposure remains insignificant at net short $134 million, which is approximately 3.8 percent of our shareholders’ equity,” according to a letter posted on the New York-based firm’s website today.

Jefferies lost more than 60 percent of its market value this year through last week as the company came under pressure from short sellers. MF Global’s $6.3 billion bet on European debt led to an Oct. 31 bankruptcy that froze the accounts of some customers and spurred scrutiny of similar stakes at financial firms.

Jefferies “has been barraged by a group of people maliciously spreading rumors, half-truths and outright lies through every means possible,” according to the letter, signed by Chief Executive Officer Richard Handler and Brian Friedman, chairman of the executive committee. “While it may be necessary for us to continue to respond to these ill-conceived attacks, we fortunately can do so on a firm foundation and with confidence in our funding and business model.”

Handler wrote that the firm repurchased $50 million of its bonds due in 2012 in the past few weeks. The balance sheet is “highly liquid,” and at the end of last week, the firm had more than $2.2 billion in cash, almost $1 billion of unpledged quality collateral and $1.7 billion undrawn from $1.95 billion in total lines of credit, according to the letter.

Jefferies fell 2 percent to $9.96 at 10:26 a.m. in New York trading.

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