DUBLIN SPECIALIST lender International Securities Trading Corporation (ISTC) made a final loss of €850 million selling its loans to customers and financial assets following the collapse of the business last year, newly filed accounts show, writes Simon Carswell.
The firm was renamed Collins Stewart ISTC after being bought out of examinership for €5 million by the London investment bank.
Despite its financial difficulties, the accounts show ISTC traded profitably before margin calls - sparked by the falling asset values amid the credit crunch - forced the sale of its loans and assets.
It made a profit of €12.1 million in the 18 months to March, double the amount it made in its previous accounting period - for the 15 months to September 2006.
However, the forced sale of its assets and loans, at heavily discounts, pushed ISTC deep into the red. It was left with a loss of €160.1 million after heavy debt write-offs.
Investors and banks were forced to write off €820 million in debts owed by ISTC in the collapse of the business and its subsequent sale to Collins Stewart.
The scale of the write-off made the ISTC collapse the largest cash loss in Irish corporate history.
The latest accounts reveal the final figures covering ISTC's period of High Court protection, which began last November when the firm became the biggest Irish casualty of the financial crisis.
The firm was forced to postpone its results, suspend its shares and cancel a fundraising last year after some of its riskier assets were written down in value.
ISTC earns profits by borrowing money in the international debt markets, investing in complex credit products and lending the money on as capital to banks and financial institutions. It also brokers and manages debt transactions for financial institutions.
The latest accounts show that ISTC earned income of €145.5 million in the 18 months to March, up from €24.1 million from the earlier period. The company's assets dropped to €43.3 million from €1.1 billion, while its liabilities fell to €38.3 million from €941.7 million as the firm unwound its positions following its financial difficulties.
ISTC chief executive Tiarnan O'Mahoney said that, having survived its period of examinership, there was still demand for the firm's services, as the crisis meant there was a greater demand for bank capital among smaller banks.
"Certainly the business of bank capital is stronger and larger than 12 months ago," he said.
ISTC would make profits this year, he said, and would expect to increase its profits next year.
"The basic demand for our product has grown from a significant base to a much larger base."
He said that ISTC still had the same number of counterparties (customers), about 600, as during its financial difficulties. He said ISTC had an opportunity to provide capital to the level below the top tier of global financial institutions not being serviced by the big investment banks due to the crisis.
