July 11, 2012 / 1:40 PM / in 5 years

ICAP chief distances broker from Libor scandal

3 Min Read

LONDON (Reuters) - ICAP chief executive Michael Spencer sought to reassure investors that his broking firm was not involved in the interest rate-fixing scandal engulfing the world's top banks, despite having suspended two of its employees.

"We do not collate, collect, contribute to or calculate Libor and have never done so. We are not directly involved in the Libor process," Spencer said on Wednesday, referring to the London Interbank Offered Rate at the heart of the scandal.

Shares in ICAP, the world's biggest inter-dealer broker, hit a two-year low after Barclays was fined more than $450 million last month for manipulating Libor and the Financial Services Authority widened its investigations.

Spencer added that ICAP was asked to provide information to the regulators because the firm and its rivals match the buyers and sellers of many Libor-based financial products, including the banks that set the lending rate.

"We, like the majority of other brokers, I would assume, were approached by regulators a while ago to ask us to investigate and look into our business, particularly in relation to some clients," the ICAP chief said.

"We thought it appropriate to put a couple of staff on administrative leave as a result of information that came out," he added, declining to give further information.

Spencer, seeking to placate investors before the broker's annual meeting on Wednesday, also said that he is bringing forward plans to cut 50 million pounds ($77.5 million) of annual costs to offset a slowdown in trading activity.

The company said in May that it would make the cuts by the end of March 2014, but on Wednesday pledged to complete the process by the end of the current financial year in March 2013.

"I'm pleased with the rapid progress we have made in our cost-saving program," Spencer said.

ICAP shares were 1.4 percent higher at 1248 GMT, outperforming the FTSE 100 index, which was down 0.27 percent.

The company cut almost 100 staff in London and New York last month, marking the latest wave of jobs cuts in a sector struggling with weak markets.

Wednesday's cost-saving pledge came as ICAP blamed a slowdown in broking activity for a 9 per cent drop in first-quarter revenue.

"The sluggish global economy and euro zone crisis are inevitably leading to reduced trading volumes despite some active days," Spencer said in an emailed statement.

ICAP said that average daily trading volume on its bond and currency platforms in the three months to June 30 was $712 billion, down 19 percent on the 2011 period.

Richard Perrott, an analyst at Berenberg Bank, said: "Near term, the results are neutral as the broker looks to compensate for suppressed volumes with cost cuts."

Perrott added that plans to overhaul ICAP's foreign-exchange trading platform should help it to halt erosion of market share.

Spencer said on Wednesday that ICAP planned to make a major announcement on the future of the foreign-exchange system next month. ($1 = 0.6454 British pounds)

Editing by David Goodman

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