Icap to cut back at ailing cash equity unit

Icap, the world's biggest interdealer broker, said yesterday it would cut back its troubled cash equities operation to an execution-only service, dashing hopes the business might be sold.
By The Newsroom
Published 23rd Mar 2010, 10:32 BST
Updated 23rd Mar 2010, 10:32 BST

The full-service equities business will switch to an execution-only model in its key European and Asian markets, carrying out clients' trading instructions but no longer offering research and investment advice, the company said.

Shares in Icap, whose main business is brokering trades between professionals in financial and commodity markets worldwide, were down 3 per cent at one stage.

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The move, which will cost Icap 51m and result in the loss of up to 114 jobs, comes five weeks after the company began a review of the equities business.

The unit, launched in 2008 as part of a diversification strategy, has taken longer than Icap expected to break even and contributed to a shock profit warning from the company on February 5 which wiped a fifth off its stock market value.

The drop in Icap's shares yesterday more than cancelled out gains last week after a press report suggested the company was close to finding a buyer for the equities operation.

"In the light of recent press speculation that Icap had found a buyer for its cash equities business, yesterday's news may come as a disappointment to some," Panmure Gordon analyst Vivek Raja said in a research note, reducing his recommendation on Icap shares to "hold" from "buy".