7th Nov 2014 07:52
LONDON (Alliance News) - Tullett Prebon PLC Friday reported a drop in revenue over the four months to the end of October year-on-year but said that the fall in the final month and in September was less marked in comparison, as the interdealer broker saw improved levels of activity in financial activity due to the recent pick-up in market volatility.
In a statement, the interdealer broker, which facilitates the trading activities of its commercial and investment banking clients in the wholesale financial and energy sectors, said revenue in the four months July to October of GBP233 million was 4% lower than in the same period last year at constant exchange rates and 8% lower as reported.
However, revenue in the two months September and OCtober was unchanged at constant exchange rates and 2% lower as reported.
Revenue from January to October amounted to GBP594 million, 11% lower than in the same period last year at constant exchange rates and 14% lower as reported.
Tullett Prebon said market volatility had the biggest effect on financial activity in the Americas and in the Asia Pacific region, while noting a more modest level of improvement in Europe and the Middle East, which it put to the "cyclical effect of further flattening and lowering of yield curves which continues to dampen trading activity in the region". However, it noted that market conditions have continued to be challenging.
Interdealer brokers have been hit hard by the vast regulatory, structural and cyclical changes that their investment bank clients have faced since the financial crisis, especially as they de-leverage in order to shore up their balance sheets to meet stricter requirements.
Tullett Prebon itself has already outlined plans to cut headcount and other fixed costs, with the aim of reducing annual fixed costs by more than GBP40 million through the exit of around 160 front office headcount and around 50 back office headcount and vacating office space.
"The annualised operating profit benefit from these actions, as previously estimated, is expected to be around GBP35 million with a targeted benefit of around half that amount in the second half of this year," Tullett Prebon said Friday.
"We continue to estimate that the cost of these actions, including the GBP3.2 million non-cash write down of an employment incentive grant receivable that may not be recoverable due to the reduction in headcount, will be around GBP45 million, of which GBP21 million are non-cash charges," Tullett said.
That cost will be charged as an exceptional item in the 2014 accounts.
By Samuel Agini; [email protected]; @samuelagini
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