ICAP axes chief executive and blames Brexit costs for earnings hit
Shares in the interdealer broker slumped as much as 33% after the shock announcement.
London broker TP ICAP has seen around a third wiped off its stock market value after axing its chief executive and warning over a hit to earnings from Brexit costs.
The group – the world’s biggest interdealer broker – said boss John Phizackerley had left with immediate effect and has been replaced by Nicolas Breteau, the head of its global broking division.
The announcement came as it warned over full-year underlying earnings, which it said would be hit by an extra £10 million of costs relating to Brexit, new regulations and IT security.
These costs are set to surge to £25 million next year, while it is also spending about £40 million after ramping up investment to expand the group.
TP ICAP, which changed its name from Tullett Prebon after snapping up ICAP’s voice broking business, also announced it would slash its annual cost savings target from £100 million to £75 million as it refocuses on investment in the business.
On its decision to sack Mr Phizackerley after four years at the helm, the group said a “change of leadership” was needed to take the business forward after the ICAP deal.
Chairman Rupert Robson said: “The potential for these combined businesses remains extremely compelling and this will be evidenced in the coming years.
“However, it has become clear that a change of leadership is required to execute our medium-term growth strategy and deliver the detail of the integration process.”
He said Mr Breteau’s appointment was part of an “established succession plan”.
TP ICAP also confirmed the appointment of Robin Stewart as chief financial officer on a permanent basis.
In its update, the firm said revenues were 3% higher in the six months to June 30 with exchange rate effects stripped out, and 2% higher on a reported basis.
It said both Tullett Prebon and ICAP has contributed to the revenue growth.
Tullett Prebon completed its deal to buy ICAP’s phone-based broking business at the end of 2016 in a move creating the biggest player in the interdealer broker market, overtaking New York rival BGC Partners.
The remainder of ICAP not involved in the deal was renamed Nex Group.
Marcus Barnard, an analyst at Numis Securities, said it was a “disappointing” announcement, which comes as the firm “faces up to the challenges of integration while delivering a medium-term growth strategy”.
Analysts at Peel Hunt added: “The statement confirms that cost reduction expectations were too high and that more cost is going into the business.”