Stifel selling off Sterne Agee independent broker-dealer business it acquired last year

CEO Ron Kruszewski had indicated in November that the B-D's lower margins were dragging down the wealth management group.
SEP 13, 2016
Stifel Financial Corp. is dumping Sterne Agee's independent brokerage business just about a year after acquiring it. Stifel said Monday it was selling Sterne Agee Financial Services Inc., along with its clearing and advisory businesses, to INTL FCStone Inc., a financial services company with roots in commodities. The sale affects about 600 independent reps and advisers. Terms of the deal, which is expected to close in July, were not disclosed. Stifel Financial acquired the privately held Sterne Agee Group Inc. for $150 million in cash last June. Stifel is hanging on to Stern Agee's private client group and institutional fixed-income business. To support the Sterne Agee businesses it is buying, INTL FCStone has agreed to hire substantially all of the Birmingham, Ala.-based support professionals, according to a press release from the two companies. In the past, Stifel CEO Ron Kruszewski had been critical of the independent broker-dealer business. In a conference call with analysts in November, he said he was looking for better performance out of the independent B-D. When discussing Stifel's global wealth management group, he said: “The margins were lower than last year due to the independent contractors from Sterne Agee, who operate at lower margins than our traditional wealth management business.” Later in the call, in response to an analyst's question, he said: “I think overall, and I think in the industry, independent business tends to operate at lower margins. And so we've been looking at, and will continue to evaluate, how the Sterne businesses fit into our overall margin analysis.” (More: Stifel's purchase of Sterne Agee likely not its last in the broker-dealer space )

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