April 12, 2019 / 11:09 AM / a year ago

UPDATE 1-Marex makes record profit; takes provision ahead of ruling

(Adds detail, CEO comment)

By Eric Onstad

LONDON, April 12 (Reuters) - Commodity broker Marex Spectron, which is awaiting the judgement in a court case in which it is accused of failing to identify a fraud, has reported a record pre-tax profit of $45.2 million for 2018.

French bank Natixis sued Marex for $32 million in 2017 over fraudulent receipts in connection with nickel stored at warehouses in Asia. Marex has rejected the lawsuit and a trial was held in January this year at London’s High Court. The parties are awaiting a ruling.

The receipts were part of a repurchase agreement, arranged by Marex, between Natixis and a Hong Kong firm. None of the parties in the case have disputed that the receipts were fraudulent but no accusation has been made as to who faked them.

Marex said on Friday that profit before tax surged 80 percent before one-time expenses and a provision of $31.9 million linked to the court action.

“We’ve also had a good start to this year, the first quarter has been good, so that’s pleasing,” Chief Executive Ian Lowitt said.

Marex recorded strong results in its metals business, which had a 45 percent rise in revenue, while agriculture posted a 54 percent jump in revenues.

In the first half of last year, surging volumes and volatility in industrial metals, largely due to U.S. sanctions imposed on Russian aluminium producer Rusal, were a major money-spinner for several brokers and banks, according to a Reuters poll.

Lowitt declined to give any details about any potential takeover of Marex, which is owned by private equity firms and has been for sale for several years, sources have said.

Reuters reported last September that Chinese conglomerate Fosun International Ltd was in discussions to buy Marex.

“To the extent we’re successful.. as we were in 2018, will increase the level of interest in the firm, but there’s nothing directly in process,” Lowitt said when asked if there were any takeover talks ongoing. (Reporting by Eric Onstad; Editing by Susan Fenton and Mike Harrison)

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