City broker FinnCap is putting its expansion plans on hold, cutting jobs and reducing office space amid a brutal outlook for capital markets transactions.
The broker’s revenue was halved to £16.4million due to falling trading, according to its half-year results to September 30.
Like many City brokers, who have struggled following the second version of the Markets in Financial Instruments Directive – a sweeping EU regulation rolled out in 2018 – FinnCap has sought to move away from its traditional reliance at the cost of providing brokerage services to UK Plc.
Rivals such as Numis, Peel Hunt and Liberum have also sought to offer more investment banking services in recent years, diversifying away from equity research and stock exchange listing fees.
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However, FinnCap said in a statement that it is putting some of those investments on hold. In the meantime, it has cut 15 jobs through voluntary and compulsory layoffs across all parts of the business, it said in a statement.
“Expansion into consulting areas outside of our core service areas is no longer a priority” due to declining revenues, the statement said, with the company also cutting other fixed costs.
“These adverse conditions are likely to continue for some time and we have therefore taken appropriate steps to reduce our fixed operating cost base by managing discretionary spending and reducing headcount across all business functions. to align it with the opportunity we see before us,” chief executive John Farrugia said in a statement.
FinnCap is also looking to sell “surplus” office space and has identified new savings, the statement said.
FinnCap reported steep declines in all parts of its business. The brokerage raised just £80m on the stock markets in the six months to September 30, down from £250m on the same period a year earlier, according to the results. He also advised on £430m of private M&A deals, down 57%.
M&A deals for public companies also fell at FinnCap from £500m to £75m, and debt finance mandates raised £90m less to £160m. pound sterling.
UK stock market fees fell to a 10-year low in 2022, while European ECM activity fell 74% to $70.4 billion so far this year, according to the data provider Dealogic.
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