Gleacher says 20 people quit credit products division

Wed Feb 20, 2013 6:57am EST

Feb 20 (Reuters) - Investment bank Gleacher & Co Inc said 20 employees had left its credit products division and that the departures would hurt revenue in the short term.

The New York-based company, which said last week it had given up its search for a buyer, said it could not estimate the magnitude and duration of the revenue impact.

The credit products division has 73 employees following the departures, Gleacher said in a regulatory filing.

Gleacher said the affected division provides analysis, sales and trading on high-yield and investment-grade credit securities, as well as trading services, liability management, corporate debt repurchase programs and new issue distributions.

The filing comes a day after Gleacher, which lost $78 million last year, said it gave Chief Executive Thomas Hughes a cash bonus of $750,000 for his 2012 performance.

In reporting its fourth-quarter results on Friday, Gleacher said its compensation and benefit expenses for the period skyrocketed to 81.7 percent of revenue, far above the 50 percent to 60 percent level that most small Wall Street firms seek.

The compensation ratio reflects the investment bank's decision to pay its year-end 2012 bonuses primarily in cash to retain executives at a time when its stock was trading at a "significant discount", executives said last week.

The company's shares, which have fallen more than 26 percent since Thursday, closed at 69 cents on the Nasdaq on Tuesday.

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