Interesting development. SMBC already owned ~5% of Jefferies, and now increases their stake to 15%. Pretty interesting to see.
Curious to see how this will play out. Jefferies could use SMBC's massive balance sheet to its benefit and help swing with some of the bigger players.
https://www.ft.com/content/49654c8b-6182-47e0-963d-18671113b0ff
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On the one hand SMBC has similar assets to Citi, but on the other Japanese culture is not compatible with American one
I think it could be dangerous for Jeff to go down this path if not properly managed
Could you expand?
Don’t know how big of an IB arm SMBC had, but looks like their M&A and Equities team will be merged into the respective Jefferies’ teams. It looks like at some point in the future, SMBC will increase the stake even further but I think what made Jefferies different was its ability to be entrepreneurial- don’t know how the Japanese culture will jive with that.
SMBC will also get a seat on the JEF board.
SMBC M&A is a joke...
ECM is too, but their DCM poached a few MS MD's and are seem to be fairly well respected.
Can't see the Japanese culture jiving with how entrepreneurial Jefferies is, but as of now I would imagine that Jefferies culturally should remain the same. SMBC is very conservative/Japanese in the lending space, but that isn't a space that Jefferies traffics much in anyways.
What m&a team? I guess maybe in Japan?
SMBC has a M&A team in the US
What's the big deal? Morgan Stanley is owned by Japanese Mitsubishi by 22%. How is this any different?
Both MS and MUFG are full service investment banks.
Jefferies and SMBC are both weak in areas the other is strong, Jefferies does not have a strong balance sheet and SMBC is weak in domestic M&A and equities.
It seems like the banks are somewhat combining to create a full service investment bank - the M&A, ECM, ER and Equities businesses are merging and SMBC/Jefferies will soon be doing joint pitches and client coverage.
MS and MUFG used eachother to penetrate the other's respective domestic markets.
SMBC and Jefferies are looking to merge some groups and form a bank strong in both advisory and balance sheet.
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