Rea offsets bond damage

(First Edition)

THE small London merchant bank, Rea Brothers, the small London merchant bank, was forced to write down its bond portfolio by pounds 854,000 in the first half of 1994, but progress in the rest of the business saw meant that pre-tax profits fall only by only a fifth to pounds 621,000, writes John Willcock.

Rea is became the latest victim of the February's bond market carnage in the bond market in February bond market to report. yesterday. It normally handles a sterling bond portfolio of pounds 3.5m-pounds 5m, and the February interest rate rise in the US came when the holding was at its highest at pounds 7m. The bank published a profits warning in June.

Roger Parsons, managing director, said the portfolio of short-dated high-quality securities was now fully hedged and the bank would wait sit on it until markets recovered in order to avoid realising the loss. 'We got it wrong,' he said. admitted.

Dealing profits of pounds 500,000 last time became evaporated to a pounds 736,000 loss in the six months to 30 June. 1994. Fees and commissions compensated were for this, up from pounds 4m to pounds 5.5m.

This improvement stemmed from fund management, where funds grew by 7 per cent to pounds 263m, and the trust and company administration division., where gross income grew by 17 per cent. Corporate finance also had a good year, said Mr Parsons. Rea's Earnings per share fell from 1.42p to 1.13p. while The dividend was increased rose from 0.3p to 0.5p.