Raymond James Financial Inc.
) is set to pull down the shutters of its equity research wing in
Brazil. The company held the country's intricate tax system and
stricter regulatory landscape responsible for the unit closure in
Raymond James, after a thorough analysis, inferred that the
difficult legal and tax environments are increasing the costs to
run the unit. These costs were eating away a significant portion
of income from the unit. Under these circumstances, the company
came up with the decision of shuttering this operation.
The closure will have a massive impact on the workforce that
Raymond James employs in the country. Although small in number,
all the employees will be retrenched upon the closure. It has
eight analysts in Sao Paulo and four employees supporting Latin
American trading and sales in New York and London.
However, Raymond James will continue its operations in other
Latin American countries - such as Argentina and Uruguay - along
with its other global operations centered in the United States,
Canada and Europe. The company employs a team of around 400
diligent analysts overseas with about 400 companies under their
Earlier this year, Raymond James concluded the acquisition of
Morgan Keegan & Company, Inc. - the securities brokerage arm
Regions Financial Corp.
). The deal was signed for $1.2 billion. Following the closure of
the deal, Raymond James also laid off 218 positions, representing
less than 2% of about 13,000 workers of the combined firms.
Of the total jobs cuts, 143 were at Morgan Keegan and 75 were
removed from Raymond James. The equity capital markets and
fixed-income groups specially witnessed a reduction in number of
REGIONS FINL CP (RF): Free Stock Analysis
RAYMOND JAS FIN (RJF): Free Stock Analysis
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Shutting non-profitable/ non-core units to focus more on
fundamental activities seems to be the latest strategy employed
by financial institutions to improve the performance profile
amidst a tough economic backdrop. Ceasing the non-performing
Brazilian unit by Raymond James reflects this very strategy. This
step will surely bring down costs and positively impact the top
line of the company.
Currently, Raymond James retains a Zacks #2 Rank, which
translates into a short-term Buy rating. However, considering the
fundamentals, we maintain a long term Neutral recommendation on