Plus 500 could lose half of UK customers says broker

19th May 2015 08:01

After online broker Plus500 suspended more than half of its UK customer accounts due to new anti-money-laundering checking processes, its house broker has assumed between a third and half of customer could leave.Around 50% of group revenues are derived from customers trading via Plus500's UK subsidiary, with 55% of UK customer impacted until the paper document review process is complete, with the 45% electronically verified customers unaffected.A note from broker Liberum on Tuesday said this implied that Plus's run-rate revenues over the next 2-4 weeks or so could be temporarily reduced by up to 28%.On a 12-month view, a "preliminary sensitivity analysis" by the broker has indicated that its revenue forecasts could be reduced by 9-14% as Plus500 prioritises higher-revenue customers, leading to 2015 earnings per share forecasts being cut by roughly 20-30%."Within 2-4 weeks the majority of impacted customers will likely have their proof of address documents (utility bills and bank statements etc) reviewed and approved. The relatively small remainder whose documents were identified as too blurry or otherwise inadmissible will have to submit new proofs of address. We expect those asked to submit new documents will in fact be motivated to do so, given that they can't otherwise access their Plus500 cash balances."Liberum estimated that it would be "unlikely" that more than 33-50% of impacted customers would leave."The broader question is the reputational impact on the Plus500 brand which may, for at least a couple of months, adversely impact average user acquisition costs, churn and valuation multiples."