Australia's Macquarie Group Warns of Profit Hit

Australian investment bank Macquarie Group warned on Thursday it faced extremely tough market conditions in the December quarter that would hit its profits, sending its shares down sharply lower.

The group, headed to its first profit fall in 17 years, said in a statement that conditions had been challenging for almost all of its businesses. It said it would give a further update at a regular briefing in February.

Macquarie shares were down 6.5 percent at A$31.54 in the morning session Sydney after to falling to as low as A$31.19.

Investment banks worldwide have suffered in the global credit crisis, leading them to raise capital and sell assets. So far Macquarie has said it would not need to raise equity to shore up its capital, as Australia's commercial banks have done.

Instead Macquarie is trying to sell about A$15 billion ($10.77 billion) of its assets under management, with A$12 billion sold so far, to focus on more profitable parts of its business.

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That included the sale of its A$1.5 billion margin lending portfolio to Australia's Bendigo and Adelaide Bank for A$52 million worth of convertible preference shares in Bendigo and Adelaide, announced on Thursday. 

The group, nicknamed the "millionaire's factory", was earlier this month said to be looking to put one of its top-end properties in China for sale with a price tag of around 300 million yuan ($43.90 million).

Another Australian investment company, Babcock & Brown, struggling after a debt-funded expansion binge, is set to announce a partial response from its lenders to a debt restructuring plan that involved a debt-for-equity swap.

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