Paddy Power has told London Capital Group Holdings plc (LCG), the online financial spread betting and trading company, that it will exit the financial spread betting business and terminate its white label agreement with LCG.
LCG saw this coming last week when Paddy Power said that it was currently reviewing its financial spread betting business Paddypowertrader, a white label customer of LCG since late 2007. Since Paddypowertrader accounted for 17 per cent of LCG’s total active clients, shares in LCG plummeted nearly 15 per cent following the announcement last week.
Paddy Power had said that it had been evaluating options, but following a review of the business, the company concluded that the balance of risk and reward was not favourable to further invest in Paddypowertrader and decided instead to shut down the service.
Paddy Power said that the decision would not give rise to any material costs or impact on its expected profits over the coming years.
In a statement to the London Stock Exchange this morning, “Further to the statement made on Tuesday 1st March, London Capital Group has been informed by Paddy Power that following the review of their financial spread betting business they intend to terminate their LCG operated White Label contract and will be exiting the financial spread betting space,” LCG said.
The company said that both LCG and Paddy Power are now in negotiation to agree a mutually beneficial termination agreement, with Paddypowertrader customers to be invited to transfer to LCG’s Capital Spreads brand at a later date yet to be agreed.
This latest move accompanies an announcement by Paddy Power of plans for more growth in continental Europe.