Published by Global Banking & Finance Review®
Posted on March 9, 2026
4 min readLast updated: April 1, 2026
Add as preferred source on GoogleJefferies projects a modest earnings hit of under $20 million from its £103 million warehouse exposure to collapsed UK lender Market Financial Solutions (MFS), while separately disputing Western Alliance’s $126.4 million lawsuit tied to First Brands receivables.
By Arasu Kannagi Basil and Pritam Biswas
March 9 (Reuters) - Jefferies said on Monday that Western Alliance Bancorporation had not extended credit to the investment bank and added it expects losses tied to collapsed UK mortgage lender Market Financial Solutions (MFS) to be under $20 million.
Western Alliance on Friday filed a lawsuit against Jefferies for not completing a payment of $126.4 million it owed the regional lender for loans tied to bankrupt auto parts supplier First Brands Group.
Jefferies said on Monday Western Alliance had made non-recourse loans for more than four years to two Point Bonita-owned special-purpose entities, which were backed only by receivables from First Brands. The bank had no guarantee or payment rights from Jefferies or the Point Bonita master fund, it said.
"Jefferies has no obligation to pay off a non-recourse loan Western Alliance chose to make to a special purpose vehicle against First Brands receivables. The statement that Jefferies 'couldn't' repay $126 million is false and absurd," Jefferies CEO Richard Handler and President Brian Friedman said in a letter.
While considering a forbearance agreement before First Brands filed for bankruptcy in September 2025, Western Alliance sought guarantees, but Jefferies and Point Bonita refused, the investment bank said.
Point Bonita SPVs are owned by Point Bonita master fund. The fund is managed and controlled by Leucadia Asset Management, a Jefferies-affiliated asset management business.
Western Alliance proceeded with a forbearance, fully aware its recourse was limited to the borrowers' assets, Jefferies said.
"We are confident in the merits of our case and look forward to presenting the facts through the legal process," a Western Alliance spokesperson said.
Handler and Friedman said the impact of the First Brands collapse remains "manageable, and any losses will be readily absorbed."
PRESSURE ON SHARES "OVERDONE"
"The pressure on JEF's shares is enormously overdone," said Chris Kotowski, senior analyst at Oppenheimer & Co in a note.
"Fraud losses are a regrettable fact of life... What matters is that the risks are relatively small and manageable in relation to a company's capital and earnings power and that certainly seems to be the case in these two instances."
Jefferies shares, which have slumped about 40% so far this year, were down 2% on Monday. Morgan Stanley downgraded the stock on "elevated uncertainty around credit risk and legal risk."
"General sentiment is very cautious. The firm has been involved in most major credit issues this cycle and so why should it trade north of tangible book value anytime soon?," said Brian Finneran, managing director at Truist Financial.
Western Alliance's shares were down about 3%.
MFS HIT "WITHIN TOLERANCE"
Jefferies said one of its European units had loaned MFS 103 million pounds ($137.42 million) under a warehouse facility secured by certain of the mortgage provider's bridge loans to residential borrowers, property investors and landlords.
The bank has recovered about 25% of the facility in cash and believes another nearly 40% is secured by valid loans, while it continues to review the remainder of the portfolio.
The collapse of the little-known MFS last month renewed concerns about wider losses among banks and stoked fears of more "cockroaches" in the booming private credit industry.
"The facility was sized at a level that was within our risk appetite and the amount of the net loss is well within our tolerance," Handler and Friedman said.
($1 = 0.7495 pounds)
(Reporting by Arasu Kannagi Basil and Pritam Biswas in Bengaluru; Editing Maju Samuel and Sriraj Kalluvila)
Jefferies expects less than $20 million hit to its earnings from its exposure to the collapsed UK mortgage lender Market Financial Solutions.
The collapse of Market Financial Solutions has renewed concerns about broader losses among banks and raised fears regarding the private credit industry.
One of Jefferies’ European subsidiaries loaned MFS 103 million pounds ($137.42 million) under a warehouse facility.
Western Alliance sued Jefferies for not paying $126.4 million tied to bankrupt First Brands Group loans, which Jefferies denies any obligation to repay.
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