Prudential Financial Inc. today announced the closing of its Prudential Equity Group unit, which has been selling and trading stocks and providing stock research for institutions.
“By and large, operations will shut down immediately,” says Prudential spokeswoman Theresa Miller. “No equity research will continue beyond today.”
The research department already has closed its doors and dropped all domestic and international research coverage.
Most operations that are still up and running will shut down by June 30, Prudential says.
Prudential put its retail equity operations in a joint venture controlled by a unit of Wachovia Corp., Charlotte, N.C., in 2003.
The Prudential decision to get out of the institutional equity business will affect about 420 employees and offices and trading operations in London, Paris, Tokyo and Zurich as well as in Atlanta, Boston, Chicago, Cleveland, Kansas City, New York, Philadelphia, San Francisco and Washington.
The institutional equity unit generated $34 million in income from continuing operations before income taxes in 2006 on $260 million in revenue.
Although the unit reported an operating profit, “everything’s about scale, and we weren’t big enough to succeed,” Miller says. “It comes down to scale and challenging competitors.”
Prudential estimates closing the institutional equity unit will cost about $110 million, with $75 million going to cover employee severance costs, retention costs and other employee-related costs.