Still worth­while

Di­ver­si­fi­ca­tion works for it

Finweek English Edition - - Companies & Markets -

IN­VESTEC EM­PHA­SISES the re­silience of its di­ver­si­fied busi­ness struc­ture, span­ning six ma­jor di­vi­sions and three main ge­ogra­phies around the world. This em­pha­sis has at times been treated with scep­ti­cism – is the group try­ing to get away from the “in­vest­ment bank” tag that has pos­si­bly be­come the most un­pop­u­lar in­vest­ment af­ter last year’s record num­ber of bank­ing fail­ures?

Analysing the divi­sional per­for­mance in the lat­est an­nual re­sults to end-March does, how­ever, sup­port the di­ver­si­fied busi­ness model ar­gu­ment. It ap­pears to work best un­der the dif­fi­cult eco­nomic and trad­ing con­di­tions In­vestec ex­pe­ri­enced through its fi­nan­cial year, par­tic­u­larly in the sec­ond half. CEO Stephen Kos­eff says while many ac­tiv­i­ties are un­der pres­sure and will re­main so in the short term, the model also presents In­vestec with some unique op­por­tu­ni­ties.

Pri­vate client ac­tiv­i­ties – In­vestec pri­vate bank and pri­vate client port­fo­lio man­age­ment and stock­broking – used to be the main con­trib­u­tor to op­er­at­ing profit, worth £193,7m in fi­nan­cial 2008. That changed in 2009 as op­er­at­ing profit from this divi­sion de­clined by 46% to £104,6m. But the gap was partly filled by the cap­i­tal mar­kets divi­sion, which saw a 22,3% in­crease in op­er­at­ing profit to £141,4m.

The big­gest de­cline came in in­vest­ment bank­ing with op­er­at­ing profit down 61,6% to £28,2m. But once again this was partly off­set by a strong gain (off a low base) in

Ben­e­fit­ing from the dis­ar­ray at other banks. Stephen Kos­eff

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