Icap recovering after WTC tragedy

Icap, the world’s largest interdealer broker for interest rate swaps, has substantially rebuilt its New York broking business following the loss of its entire New York offices, which took up three levels in the World Trade Center (WTC).

Michael Spencer, group chief executive officer, said: “Our electronic trading platform, ETC, has been restored to operational status for the majority of our customers. We are still short of direct lines and other infrastructure, but expect these to be restored in our temporary facilities within two months.”

The company expects to be fully operational in a new North American HQ in the New York Metropolitan area within months. It is anticipated that estimated proceeds of $50 million insurance cover, and the disposal of London Stock Exchange and Deutsche Börse shares, will be sufficient to re-equip the new offices and cover the impact of anticipated exceptional costs.

Prior to September 11, Icap saw buoyant trading conditions, with revenues for the first half of the year up 13% compared with the previous year. Since the disaster, Icap's financial markets business outside North America has continued to be active. In New York, with the recommencement of broking operations on September 20, revenues have reached around 60% of previously budgeted levels. Unaudited pre-tax profits, excluding amortisation and exceptional items, for the six months to September 30 2001 are estimated to be £44 million, compared with £32.9 million for the similar period in 2000.

Icap expects that, with the recovery plan and resilience of underlying market conditions, it will be able to maintain an interim dividend at the 2000/2001 level. “We fully expect to emerge from this ordeal with a stronger business than we had beforehand,” claimed Spencer, who believes Icap's electronic coverage of the spectrum of illiquid to liquid markets will provide a significant competitive advantage in the future, despite slow initial adoption.