Jefferies is no longer the majority shareholder of market-maker KCG, after writing off $37 million of its stake amid massive first quarter losses.
The bank, which is privately owned by Leucadia reported revenues in equities of just $2 million, down from $203 million a year ago, largely due to a $145 million markdown related to two equity block positions, one of which being KCG.
Jefferies reduced its stake in the summer of last year by 6.5 million shares. It rescued KCG, formerly known as Knight Capital Group, in 2012 after the market maker suffered a devastating software glitch, prompting a $400 million sale of convertible shares arranged by the bank.
Jefferies reported revenues almost halved during the first quarter of 2016 to $592 million. ,
Total sales and trading revenues were down almost $271 million in the first quarter in 2016, compared to the same period in 2015.
Fixed income revenues were down 55%, declining just under $69 million, and equities revenues were down 99%, down by just over $200 million.
Chief executive officer, Rich Handler explained in the report that Jefferies are ‘humbled’ by the quarterly loss.
Handler said, “Our overall first quarter results reflect an exceptionally volatile and turbulent market environment…”
Jefferies is one of the first banks to release its first quarter results.
Citi said its first quarter investment banking revenues will be down by a quarter in comparison to last year, and JP Morgan also signalled a rough first quarter with double-digit declines in investment banking revenues.