Tough times not over yet, warns Close
MERCHANT bank Close Brothers yesterday warned market conditions remain challenging as it published a third-quarter trading update, the first since Preben Prebensen started his tenure as chief executive at the beginning of April.
Close said its asset management division had been hit by reduced management fees and lower margins on asset income in the low interest rate environment.
In the banking division, the firm said its loan book remained flat at £2.32bn as it continues to apply “prudent and consistent criteria” to its lending decisions. Bad debt provisions also rose, reflecting the effect of the crisis on the company’s borrowers.
The firm sounded a positive note on its Winterflood Securities subsidiary, which performed very strongly due to continued high retail volumes. Its other securities units reported less than stellar results, with Mako “slowing relative to an exceptional first half” and performance at Seydler remaining “muted”.
“We continue to face difficult conditions in the asset management and banking divisions but are confident that overall, we will continue to deliver a satisfactory performance in the current markets,” Close Brothers said in a statement.
The £67m sale of its corporate finance division to Daiwa SMBC Europe, which was announced earlier this week, will generate an £8m gain on disposal, the firm added.
Prebensen joined the company as chief executive on 1 April, having previously been chief investment officer at property and casualty insurance group Catlin.