Moneycorp warns over uncertain year ahead as Brexit fears bite
Moneycorp, the foreign exchange firm recently granted a banking licence in Gibraltar, has warned the outlook for 2016 is uncertain due to doubts surrounding a potential British exit from the European Union.
A so-called Brexit could cause extreme currency volatility that firms are finding difficult to prepare for.
Yesterday it was revealed Britain’s foreign currency reserves reached a new record high in March, suggesting the government and businesses are building a buffer to defend the pound against the prospect of a currency crisis caused by the EU referendum.
Moneycorp, a privately held company, this morning released results for 2015 showing total income rose to £125m, an 18 per cent increase on 2014.
The income rise was despite the number of transactions at the company dropping by 900,000 over the year to 7.2m, from 8.1m the year before.
Mark Horgan, Moneycorp chief executive, told City A.M.:
2016 will be a difficult year. A lot will depend on the outcome of the Brexit referendum and I would prefer not to say exactly how much it could impact transaction numbers.
Horgan said that any decision to leave the EU was a political one and not one that Moneycorp would want to be involved in, though added "coming out would definity be disruptive".
The EU referendum is set for 23 June and has divided businesses due to the uncertainty of an exit.
Moneycorp has reported it traded a total of £22.7bn worth of currency in 2015, though the number for the year before is not known.
Revenue from international payments grew by 32 per cent year on year to £21m, up from £15.9m the year before.
Read more: Moneycorp profits up on boom in international payments unit
As well as its banking licence in Gibralta set to boost European expansion, Moneycorp announced in December last year it would look to grow its US presence by teaming up with media giant CNN in a licensing deal to launch CNN Money Transfers.
Horgan has played down the potential boost to transactions and revenue, cautioning it the initiatives will take time to get going.
"A banking licence is not going to make us into the next HSBC, and we're conservative about how long it will take to kick off the US expansion. CNN hasn’t really got going yet with the marketing," said Horgan.
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The banking licence will see the creation of the Moneycorp Bank and allow the forex firm to take on larger deposits. Gibraltar was chosen due to the number of existing clients based there.
The group's kiosks, often spotted changing money in airport departure lounges, saw its total number of physical branches shrink by one over the last year as online transaction growth takes off.
Moneycorp's online customer base grew by 37 per cent over the last year.
The banking licence means that Moneycorp will be subject to increased regulatory burdens, though it claims to have standards that are at "bank levels" already.
"We’re not intimated by the regulatory burdens," said Horgan.