City Index – Light at the end of the Tunnel?

City Index which is controlled by Conservative Party treasurer Michael Spencer is thought to have incurred a £61.1m loss in the year to March 2009 as the company struggled with bad debts amidst the credit crunch. In the previous year the group suffered a £30m loss.

City Index was forced to write off £35m in 2009 after clients were unable to meet margin calls and ended up in default. The year 2008 was even more painful with about £43m of write-offs. It is reported that the vast majority of the losses originated from just a handful of large-stake punters.

Additionally, the Group is thought to have written off £22m of goodwill in relation to its past takeover of IFX Markets in 2006. The City Index Group has further incurred £3.5m in re-adjusting costs.

Recently, City Index acquired a strategic holding in CDPSoft, the software house that was behind City Index’s iPhone application and thus guaranteed exclusive rights for its trading software for use on BlackBerrys and iPhones.

The City Index Group has now been re-organised and is headed by Martin Belsham who managed bookie Blue Square on behalf of Mr Spencer, prior to its sale to Rank Group in 2003 for £65m. Chief executive Martin Belsham further emphasised that the re-structuring has been successful and that the Group is now profitable. Martin said that the business is now ramping up for expansion in the Group’s rapidly-growing Asian business and continued strengthening of the Group’s technology.

Comments: No wonder City Index has discontinued its credit business; it was suffering enormous losses! I’m confident that the City Index Group will see brighter days though; they have revamped their trading platform and launched an iPhone application which is proving itself to be quite popular with clients. In July 2008, City Index also partnered with PartyGaming to launch a white-label site which was another interesting development.

Tags: City Index, cityindex

This entry was posted on Monday, December 21st, 2009 at 8:30 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.