French broker Newedge to cut jobs in shake-up: source

LONDON Thu Dec 13, 2012 2:14pm EST

LONDON (Reuters) - French broker Newedge plans to cut up to 16 percent of its global workforce, around 450 people - a source familiar with the situation said, as it restructures because of a slide in revenues.

The broker, jointly owned by Credit Agricole (CAGR.PA) and Societe Generale (SOGN.PA) and put up for sale a year ago, will make the cuts over the next 18 months, the source said, asking not to be named because of the sensitivity of the situation.

Newedge, which currently employs 2,800 people, declined to comment specifically on any job losses.

"Part of the plan is to restore profitability by reducing costs drastically," the source said, adding that the cost-cutting will come from both job cuts and from reducing infrastructure and IT outlays.

The cuts are part of a proposed shake-up at Newedge, announced on Thursday that the company said was aimed at making it more competitive.

As part of the plan, Newedge is mulling a split of its asset execution and clearing businesses into two distinct legal entities.

The proposed split will affect equities, fixed income and financial futures and options, a spokesperson said. Meanwhile, clearing and execution of commodities and foreign exchange would be included in the new clearing company, the spokesperson added.

Newedge has been up for sale for the past year but struggled to attract buyers during the euro zone debt crisis, a slowdown in trading volumes and tough new regulations.

The move to split its execution and clearing businesses may make it more attractive to buyers and will also allow it to adapt to new regulatory changes - such as Basel III - which force trading entities to hold more capital.

Clearing tends to require less capital than execution so running the business in a separate entity would allow Newedge to offer more competitive pricing.

Like many brokers Newedge has seen trading volumes fall since the 2008 financial crisis as their core customers, banks, pull back from the market. Its net profit fell two thirds to 33 million euros ($43.19 million) last year.

The firm will assess the economic viability of the clearing execution businesses it runs in each of its 20 locations in 16 countries, the source added.

(Reporting by Tommy Wilkes in London, Christian Plumb in Paris and Josephine Mason in New York. Editing by Sinead Cruise and Elaine Hardcastle)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.