IG Group share price sinks on £30m hit after Swiss Franc soars 40 per cent

Jessica Morris
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IG announced it would take a £30m hit (Source: Getty)

IG Group's share price suffered after it announced a potential hit of £30m, as its investors reacted to the Swiss central bank's shock decision to ditch its currency "ceiling".

The financial spread betting firm's share price fell as much as 6.7 per cent to £6.94 in late-afternoon trade. It said clients' "positions were closed at a more beneficial level than the company was able to close its entire corresponding hedge due to the market dislocation."

"Following this morning's exceptional announcement by the Swiss National Bank, which resulted in a sudden and extreme movement in the value of the Swiss franc, IG Group... believes it is appropriate to provide an update on the negative financial impact to the group," it said in a statement today.

"The precise level of the impact will be partially dependent on the company's ability to recover client debts, but in total it will not exceed £30m, from market and credit exposure."

(Source: Getty)

Analysts at Numis said the loss was down to bad debt losses from clients but also "good will losses" where IG voluntarily closed customer positions "where liquidity for closure was not there and IG eventually closed at a worse price."

Earlier today the Swiss central bank rattled markets by announcing the end of its currency "ceiling" of SFr 1.2 per euro, which was initially introduced to cap the currency's value during the height of the financial crisis.

The Swiss franc soared as much as 37 per cent against the euro before paring gains later in the day. Swiss stocks have also tumbled as much as ten per cent with exporters of luxury goods particularly hard hit.

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