Macquarie to Merge its Trading Businesses

Macquarie Group Ltd announced the merger of its two capital markets businesses: Macquarie Securities Group and the Commodities & Financial Markets Group. The securities firm indicated its desire to centralize operations and deliver integrated services to its clients across global markets, motivated it for the merger and change in the industry.

Macquarie Group led by Managing Director and Chief Executive Officer, Mr. Nicholas Moore is becoming more careful for its cyclical businesses outlook. Last year, it reduced half of its workforce of investment banking in Asia region and early in the current year, eliminated nearly 30 positions at its equities unit in Asia region. In the new unit, headcount reduction can come from natural attrition but no plans for imminent job cuts.

The biggest infrastructure manager of the world, which has seen high since 2012, will now face headwinds. In the period of six months ended Sept. 30, there is a decline of 2% in net income and profit attributable to its trading business fell down to 34% from the last earlier.

The merger of Macquarie Group two capital markets businesses: the Securities Group and the Commodities & Financial Markets Group will combine its research, trading, foreign exchange, execution, fixed-income, commodities businesses, and derivatives. This new unit, Commodities & Global Markets Group will be headed by Andrew Downe. The company has a separate group for handling debt, mergers, and equity capital markets as well as principal investments.

The business strategy of company’s CEO is to focus on fairly stable businesses viz. fund management, leasing and lending after struggling hard in order to compete with some global companies like Morgan Stanley and Goldman Sachs Group in mergers advice as well as in stock underwriting.

Moreover, strong competition for among firms for deals in the Asia region enforced them to an emphasis on priority areas. Asian operations have been scaled back by some banks including Nomura Holdings, Barclays and BNP Paribas SA. Analysts are still confident that Macquarie Group will ride out the obstacles. Also, analysts at Deutsche Bank stated that the bank is well positioned as compared to another peer.

Summary: Macquarie Group (Macquarie) today announced the merger of two of its three capital markets facing businesses: Macquarie Securities Group (MSG) and the Commodities and Financial Markets Group (CFM).

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