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Business News

ICAP half-year profits slump 26% to £137 million


Further signs of the extent of the strife in the City emerged today with some dire results from ICAP.

The interdealer broker — it trades on behalf of big banks only — saw half-year profits slump 26% to £137 million. With even the biggest investors reluctant to place bets while they await clarity from the eurozone confusion, trading revenues are down across the Square Mile and redundancies are high.

Michael Spencer, pictured, chief executive and 16% shareholder, admitted: “This has been one of the toughest periods in my 36-year career in the wholesale financial markets. Trading volumes have fallen significantly across nearly all asset classes.”

Spencer, who also owns spread betting house City Index and is a significant benefactor to the Conservative party, had few words of comfort for the immediate future.

“I do not believe the negative environment will continue indefinitely but equally I do not expect it to improve imminently,” he said.

ICAP warned full-year earnings would be at the low end of the range of analyst forecasts. That sent the shares wobbling down more than 5%, off 16.5p at 293.3p, leaving the company valued at £1.9 billion.

Brokerages such as ICAP and rival Tullett Prebon make money by matching buyers and sellers of bonds, currencies and swaps, but they have been hit by a drop in trading activity as investment banks cut back in the financial crisis.

Tullett Prebon said last week that revenue for the four months through October fell 12% due to “challenging” market conditions.