This increase primarily reflected significantly higher net revenues in debt underwriting, due to leveraged finance activity, and in equity underwriting, primarily reflecting an increase in industry-wide activity. The firm's investment banking transaction backlog was essentially unchanged q/q. Institutional Client Services: Net revenues in Institutional Client Services were $4.31 billion, 11% higher y/y and 16% lower q/q. Net revenues in Fixed Income, Currency and Commodities Client Execution were $2.46 billion, 12% higher y/y, reflecting significantly higher net revenues in currencies, credit products and commodities. These increases were partially offset by significantly lower net revenues in mortgages and lower net revenues in interest rate products. Although FICC operated in a generally favorable environment during 113, market conditions across products became more challenging during the latter part of the quarter, as interest rates and market volatility increased. Net revenues in Equities were $1.85 billion, 9% higher y/y. Excluding net revenues from the firm's reinsurance business, net revenues in Equities were 23% higher y/y, reflecting significantly higher net revenues in equities client execution, which reflected significantly higher net revenues in derivatives and cash products.
During the quarter, Equities operated in an environment generally characterized by higher volatility levels, particularly in Asia. The net gain attributable to the impact of changes in the firm's own credit spreads on borrowings for which the fair value option was elected was $59 million, compared with a net gain of $6 million for the second quarter of 2012. Investing & Lending: Net revenues in Investing & Lending were $1.42 billion for Q2. Results for Q2 included net gains of $462 million from investments in equities, primarily in private equities, net gains and net interest income of $658 million from debt securities and loans, and other net revenues of $295 million related to the firm's consolidated investments. Investment Management: Net revenues in Investment Management were $1.33 billion, essentially unchanged compared with the second quarter of 2012 and the first quarter of 2013. Net revenues in Q2 included higher management and other fees, primarily due to higher average assets under supervision, and higher transaction revenues compared with the second quarter of 2012. These increases were offset by lower incentive fees. During the quarter, long-term assets under supervision decreased $4 billion, reflecting market depreciation of $11 billion, primarily in fixed income assets, partially offset by net inflows of $7 billion. Net inflows primarily included inflows in fixed income assets, partially offset by outflows in alternative investment assets.
Expenses: Operating expenses were $5.97 billion, 14% higher y/y and 11% lower q/q. The accrual for compensation and benefits expenses was $3.70 billion, 27% higher than the second quarter of 2012, reflecting a significant increase in net revenues. The ratio of compensation and benefits to net revenues for the first half of 2013 was 43.0%, compared with 44.0% for the first half of 2012. Non-compensation expenses were $2.26 billion, essentially unchanged y/y and 5% lower q/q.
Capital: As of June 30, 2013, total capital was $240.08 billion, consisting of $78.04 billion in total shareholders' equity (common shareholders' equity of $70.84 billion and preferred stock of $7.20 billion) and $162.04 billion in unsecured long-term borrowings. Book value per common share was $151.21 and tangible book value per common share was $141.62, both approximately 2% higher compared with the end of the first quarter of 2013. Under the regulatory capital requirements currently applicable to bank holding companies, the firm's Tier 1 capital ratio was 15.6% and the firm's Tier 1 common ratio was 13.5% as of June 30, 2013, up from 14.4% and 12.7%, respectively, as of March 31, 2013.