IG says currency losses "not more than £30m" after Swiss franc unpegged

15th Jan 2015 15:41

Spread-betting and CFD provider IG Group rushed out a statement after Switzerland's surprise scrapping of its currency peg against the euro to say the huge swings in the value of the Swiss franc and other currencies to say the impact on its finances would "not exceed £30m".Shares in the company immediately sank on the news, and were down 6% to 698.14p at 15:27."The precise level of the impact will be partially dependent on the company's ability to recover client debts, but in total it will not exceed £30m, from market and credit exposure," the company said.With the massive forex markets moving so far and so fast, the FTSE 250 group said its market exposure occurred where client positions were closed at a better level than the company was able to close its entire corresponding hedge "due to the market dislocation".However, IG assured that Thursday's losses should be viewed against a backdrop of "very strong recent and current performance" and its "extremely robust financial position".Midway through Thursday morning, the Swiss National Bank (SNB) announced it had abandoned its minimum exchange rate of 1.20 Swiss francs per euro, surprising the market with the timing as it brought a three-year policy to an end and sending the franc soaring and the single currency crashing against the dollar.After a move which surprised investors and analysts alike, the SNB attempted to soften the blow on the currency by cutting the interest rate from -0.25% to -0.75% on larger deposit account balances. Following this morning's exceptional announcement by the Swiss National Bank, which resulted in a sudden and extreme movement in the value of the Swiss Franc, IG Group Holdings plc ("The Company", "The Group", "IG") believes it is appropriate to provide an update on the negative financial impact to the Group. The precise level of the impact will be partially dependent on the Company's ability to recover client debts, but in total it will not exceed £30 million, from market and credit exposure. The market exposure occurred where client positions were closed at a more beneficial level than the Company was able to close its entire corresponding hedge due to the market dislocation. This occurs against the backdrop of very strong recent and current performance and IG's extremely robust financial position. As scheduled, on 20 January 2015, IG will present its results for the first six months of the 2015 year, and will provide an update on progress on its strategic initiatives.