views

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.<br /><br />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.<br /><br />In the banking division, the firm said its loan book remained flat at &pound;2.32bn as it continues to apply &ldquo;prudent and consistent criteria&rdquo; to its lending decisions. Bad debt provisions also rose, reflecting the effect of the crisis on the company&rsquo;s borrowers.<br /><br />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 &ldquo;slowing relative to an exceptional first half&rdquo; and performance at Seydler remaining &ldquo;muted&rdquo;.<br /><br />&ldquo;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,&rdquo; Close Brothers said in a statement.<br /><br />The &pound;67m sale of its corporate finance division to Daiwa SMBC Europe, which was announced earlier this week, will generate an &pound;8m gain on disposal, the firm added.<br /><br />Prebensen joined the company as chief executive on 1 April, having previously been chief investment officer at property and casualty insurance group Catlin.