SA Investec's Stephen Koseff backs trader over forex collusion claims

Investec CEO Stephen Koseff says the bank does not believe that one of its currency traders is guilty of colluding to fix prices on rand-dollar trades.

The bank was awaiting further details from the Competition Commission, which was seeking to prosecute more than a dozen local and global banks for forex price-fixing among their traders, on allegations against it before it could determine any wrongdoing, Koseff said on Tuesday.

The case was confined to the "alleged conduct" of a single trader who dealt with interbank clients, he said.

 

"We don’t know whether the allegations pertain to his dealings with banks as clients or competitors. We need more clarification to know what we have done wrong. "Cast-iron integrity" was one of the bank’s core values, he said.

 Koseff’s comments follow those of Sim Tshabalala, joint CEO of Standard Bank, who said internal investigations had not revealed any wrongdoing.
Revenue from foreign-exchange trading activities had averaged less than 1% of the South African bank’s total revenues over the past 10 years, Koseff said.

Investec said it expected adjusted operating profit for the year to March to be comfortably ahead of 2016.
The appreciation of the rand against the pound over the period would add about 3.5% to the full-year earnings per share result, Koseff said.

From March 31 2016 to end-February 2017, Investec’s third-party assets under management increased 24.3% (13.9% on a currency neutral basis) to £151.2bn.
In an environment where there had been outflows from emerging markets, Investec had done well to attract funds, said Bjorn Zietsman, portfolio manager at Coro Capital.
Group loans and advances had increased 7.2% on a currency neutral basis to £23bn, off very strong growth in the previous year, Koseff said.
Customer deposits were up 5.5% to £29.6bn.

Political Turmoil
Investec had a strong balance sheet and a conservative lending policy in a challenging environment, said Ron Klipin, portfolio manager at Cratos Capital.

Investec’s largest businesses were both positioned in geographies facing political turmoil, Zietsman said.
A hard Brexit could affect growth in the UK negatively where Investec is investing considerably in a UK private-client banking offering.
Investec’s share price has still not recovered to its pre-Brexit level on the JSE, although it is up 5.79% year-to-date.

A weak economy lifted impairments in SA, but the group’s credit-loss ratio was expected to be in the range 0.52%-0.55% (2016: 0.62%).
Continued run-off of its UK legacy book had helped reduce credit losses, Zietsman said.