IG boss Peter Hetherington makes abrupt exit
IG Group’s chief executive Peter Hetherington has stepped down abruptly after three years as the boss of the spread betting and derivatives trading platform.
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The FTSE 250 group said Hetherington would be an employee until the end of the financial year but had quit as CEO and a board member immediately.
IG said it was well on the way to finding a new boss and that in the meantime Paul Mainwaring, its chief financial officer, would run the business. Hetherington's departure comes just a few days after IG reported a drop in first-quarter revenue caused partly by new restrictions on trading of complex financial products by retail customers.
As part of its succession planning IG decided it needed a CEO with global experience of the wider financial sector, it said. The company is looking for someone “who can develop the business using its industry-leading technology platform, geographic presence and product innovation”.
IG shares fell 4.4% to 669.5p at 09:01 BST.
Hetherington joined IG in 1994 as a graduate trainee and worked his way up to the top of the company in October 2015. He has led IG through preparation for a regulatory clampdown on contracts for difference (CFDs), one of its main products. CFDs let traders place bets on shares, bonds and other financial measures with small upfront stakes.
IG reported record profit last year but froze its dividend to absorb the effect of the regulatory changes, designed to protect inexperienced traders from suffering big losses. The company has said it is developing new products for retail traders that would comply with the new rules which took effect at the start of August.
On 20 September the group posted a 5% drop in revenue for the three months to the end of August. Hetherington said it was too early to draw firm conclusions about the impact of the new rules and stuck by his view that the impact on revenue would be a reduction of about 10%.
IG’s chairman Andy Green said: “Peter has been pivotal to the success of IG during his many years of service, particularly during the last three years during which he has successfully steered the company through an unprecedented period of regulatory uncertainty whilst delivering strong earnings and profits growth. I particularly commend Peter for his strong ethical leadership of IG.”
The company did not disclose the financial terms of Hetherington's departure.
Analysts at Barclays said: "This could be interpreted as a different skill set than that of the outgoing CEO, who has been with IG for 24 years, and therefore whose knowledge arguably pertains first and foremost to IG’s heritage: spread betting, CFDs, and risk management. Whilst we cannot know for sure from the outside, the wording in the quote above 'has been considering' also suggests that the board has been considering this succession issue for some time, rather than a major fall out between CEO and the board.
"This is potentially a generous interpretation, but is still quite different to what happened when Peter Hetherington became CEO, when the previous CEO (Tim Howkins) and CFO (Chris Hill) both left the business in quick succession, and there was not adequate succession planning in place."
Overall, Barclays still believes there will be "unanswered questions for some time" but, assuming nothing more meaningful has happened than described in the statement and that the effects of ESMA regulations are broadly consistent with existing forecasts, "we believe times like now with potential share price weakness should be used by shareholders to step in and add to positions in what is a global leader in its field".