Jefferies profit beats estimates as trading revenue surges

Cash Bonuses

Jefferies has vowed to pay year-end bonuses in immediately available cash, according to a Dec. 7 memo obtained by Bloomberg News, distinguishing itself from larger Wall Street competitors that are paying more compensation in deferred stock.

The firm set aside $460.4 million, or 60 percent of net revenue, for compensation expense in the fiscal fourth quarter, compared with $308.1 million, or 56 percent, a year earlier.

The Leucadia deal, which may be completed in the first quarter, could help Jefferies bolster earnings without boosting risk -- something Handler has said he wants to avoid. The firm will be able to curb tax and dividend payouts so it can tap profits to boost capital, analysts said after the deal was announced.

Jefferies has pared assets by almost one quarter in the past year following investor concern that standalone investment banks are vulnerable to Europe’s sovereign-debt crisis and market upheaval. Like other Wall Street firms, Jefferies is under pressure to cut costs amid a trading slump that has forced smaller companies to close.

Bloomberg News

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