Australia's Macquarie to exit US, European equities business

Australian investment bank Macquarie Group is exiting its cash equities businesses in the United States and Europe, a source with direct knowledge of the matter told Reuters on Tuesday, as tougher regulations bite. The bank, which employs about 700 people in cash equities, is expected to cut 100 jobs in London and New York, the source added, saying that it will have "smaller teams" in those locations to support its core Asia Pacific businesses.

Macquarie is the latest global investment bank to trim its equity operations - including trading, sales and research - in Europe over the past year as difficult market conditions and the impact of tougher regulations hit returns. "It has been very challenging for Japanese, Canadian, Australian banks etc. in European cash equities, even top 12 banks have struggled," said Amrit Shahani, research director at industry consultant Coalition.

In April, Japan's Nomura Holdings cut some jobs in its European trading business. Revenue from Macquarie's equities trading in the latest financial year shrunk by a third to A$242 million ($166 million). The company does not provide figures by region for its equities business. Macquarie plans to focus on its Asia Pacific equities trading business, the sources said, which will likely be its only major equities operation remaining after it scaled back from the Middle East in May.

A broader slowdown in equities trading has prompted banks to cut costs. In July, Deutsche Bank's massive cull of 18,000 jobs in a 7.4 billion euro ($8.3 billion) shake-up included staff reductions from Sydney to New York. At least four trading sources at other brokerages said their contacts at Macquarie's equities research and trading businesses could not be reached on their usual messaging systems on Tuesday morning.

"Lots of staff are milling around the local coffee shops ... opposite their building (in the City of London) waiting to be allowed in," one of the sources said. Bloomberg was first to report the Macquarie job cuts on Tuesday. The bank, which is due to report its half-year earnings on Friday, had said in March that it faced "challenging market conditions and reduced opportunities" in its cash equities and equity derivatives trading business. Another source at a hiring firm noted the latest move was a U-turn for Macquarie, saying it was hiring as little as a few months back.