BB&T (BBT) Cuts Jobs As It Exits Equity Research Business

BB&T Corporation (NYSE:BBT) – the second-largest lender of North Carolina – announced the closure of its equity research coverage unit, along with curtailing of its institutional sales and trading activity. The company further disclosed its plan to dismiss 61 employees in Richmond, Virginia and some employees in other offices as well, as part of its overall restructuring plan in its equity capital markets and related operations.

Rationale Behind the Exit

BB&T has been offering equity research services since 1999. Since then, the company has expanded its research division as it introduced more services for its corporate clients. However, the changing market conditions in the equity trading business led to a reduction in the company’s trading volumes and margin compression, which in turn triggered the exit.

Further, the strategy was in line with the regional lenders that have scaled back their equity divisions as their revenues were being hurt by the lack of initial public offerings and investors’ shift to passive strategies.

Impact of the Reorganization

BB&T expects this restructuring initiative to have a negligible effect on its other equity capital markets services – like equity syndicate and share repurchases.

However, the share price of the company fell 1.1% following the announcement.

Road Ahead

This restructuring initiative is expected to bring a significant change in the company’s securities team. Nonetheless, it will offer the company an opportunity to refocus its business model to further grow the debt capital markets, capital markets advisory, M&A and private client advisory platforms, where it enjoys greater market power.

Further, in an e-mail statement, the company’s spokesman, Brian Davis, said “We recognize this is a challenging time for the affected associates and their families and we're making every effort to place them into other positions. Severance packages and outplacement services will be offered.”

Currently, BB&T Corporation carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked stocks in the finance sector include HomeStreet, Inc. (NASDAQ:HMST) , Regional Management Corporation (NYSE:RM) and State Bank Financial Corporation (NASDAQ:STBZ) , each sporting a Zacks Rank #1 (Strong Buy).

BB&T CORP (BBT): Free Stock Analysis Report

STATE BANK FINL (STBZ): Free Stock Analysis Report

REGIONAL MANAGE (RM): Free Stock Analysis Report

HOMESTREET INC (HMST): Free Stock Analysis Report

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