IG Group head quits months after Swiss franc chaos costs millions

The chief executive of IG Group has quit, months after the UK’s biggest spread betting company was badly shaken by the Swiss National Bank’s bombshell in currency markets.

Tim Howkins will retire at the annual general meeting in October after nine years in charge, and seven years before that as chief financial officer. He leaves without a golden goodbye but with shares in the company worth £13m.

The announcement of his departure comes six months after the Swiss central bank unexpectedly scrapped its €1.20 cap for the Swiss franc against the euro, sending the value of the franc soaring overnight and leaving hundreds of IG’s clients who had been betting on a weaker franc painfully exposed.

IG racked up £12m in lost revenues and a further £15m in bad debts as a result. Mr Howkins said “probably not a huge proportion” of those debts would be recovered.

On the subject of his departure, he insisted: “Absolutely this is my choice and nobody else’s. I think shareholders have been very supportive of the way we handled the Swiss franc incident.” He added: “I think I’m leaving on a high.”

The Swiss shock hit the results, with pre-tax profits falling 13 per cent to £169.5m in the year to 31 May. Revenues crept 5 per cent ahead to £388m. The City marked the shares down 6 per cent or 55p to 752p.

The debacle also cost IG’s staff and board a total of £3.6m in lost bonuses and share incentives. Mr Howkins said the group now stress-tested for more “extreme” market moves, but warned that it would not let its debtors off the hook as that would set a “terrible precedent”.

He added: “We have a group of five clients we believe are financially sophisticated and absolutely have the means to pay their debts, trying to drum up media attention in the hope that we will stop pursuing them for those debts.”

IG’s chief operating officer, Peter Hetherington, will take over as interim chief executive following the AGM and is also a candidate for the job on a permanent basis.

The company benefited from a huge market sell-off last autumn – generating a record October – before January’s Swiss shock. Although its active client list grew almost 8 per cent to 136,000, giving it about 40 per cent of the market, the average revenue per client was flat at £2,937.

IG has moved into other areas to seek growth, with the launch of a stockbroking business last October. As of the end of May the company had more than 4,000 stockbroking accounts, about two-thirds of which were new to the company. Of these, about 20 per cent have moved from stockbroking to either spread betting or contract for difference trading, making them more valuable. The company has also teamed up with the fund giant BlackRock to offer exchange-traded funds to its stockbroking clients from next year.