Self-isolation in Mayfair is treating the 66-year-old founder of financial trading firm CMC Markets well: Peter Cruddas says he’s lost four pounds since he began running the business from home.
There will be nothing slim about the profits of CMC when the company reports its final results later this year. Coronavirus and the intense volatility it has wreaked on equity, currency and commodity prices mean it’s boom time in spread-betting land.
On some days last month, such as March 16, when the FTSE 100 suffered its second-biggest one-day fall ever, CMC was seeing around five times its usual trading volumes.
Its shares are up more than 30pc so far this year and Cruddas, who still owns 60pc after its 2016 float, reckons it will post around £100m in pre-tax profits for the year to March 31.
That’s not too shabby for an East End boy who grew up on a Hackney council estate and left school at 15 for his first job in the City. It’s also a vast improvement on the paltry £6.3m CMC made the previous year, when financial markets were becalmed and the entire industry was adapting to the crackdown by European regulators on leveraged trading, in which unwary punters can rack up losses many times bigger than their original bets.
Cruddas argues that his firm and others like it should be in the portfolio of any long-term investor as a natural hedge against volatility: they go up when everything else is going down.
“Clients want to buy gold, oil, shares, they want to trade currencies, they want to buy bonds, sell bonds, you just get a stampede of clients wanting to trade.” Many have “suffered” in the share carnage but CMC still keeps raking in the trading revenues, and there have been two profit upgrades in the past month.
But talking about CMC as a purely coronavirus play ruffles Cruddas’s feathers. He insists the firm was already on course for a record year before anybody had heard of Covid-19.
He says “it’s slightly annoying”, as “we’ve had six upgrades in the last financial year, and four of those were before the last quarter”. He admits he wouldn’t be making £100m without the virus but CMC was already reaping the benefit of a greater mix of “professional” clients – to whom the regulations do not apply – after fishing for the more expensive “tuna” in the trading sea.
Cruddas offers CMC’s technology to around 250 professional partners and has a stockbroking partnership with Australian bank ANZ, which doubled revenues in its first full year of trading; but for all the multimillionaire’s protestations that he’s running a “technology business” almost 60pc of the revenues come from the traditional spread-betting side.
He’s a boss of the old school and misses the cut and thrust of the office, but the company’s tech lets him run virtually the entire business remotely, with nearly all his 1,000 staff working from home as the profits roll in.
CMC is sticking by its commitment to pay out 50pc in after-tax profits as dividends. That’s good news for the bank balance of Cruddas, whose wealth was put at £510m by the Rich List last year. There’s no chance of him following the banks and cancelling the dividend in these exceptional times.
The former Vote Leave chairman says: “The Government is not going to bail out my company, or any in my sector. The only people that are going to bail out my company are the shareholders, so I have no qualms about paying the dividend because ultimately the shareholders are taking the risk. We will not be going to the Government because we know what the answer will be. It will be no.”
Cruddas – already a big donor through his charitable foundation – won’t be making any specific Covid-related donations either. He says: “We have to find £3m a week to survive. If we give our cash away and we have got nothing left, then the company disintegrates and we’ve got 1,000 people on the dole.”
He has a few ideas about how to get the economy back on its feet after the lockdown, though. Rather than tax rises from Rishi Sunak, the Chancellor, the former Conservative Party treasurer reckons ministers should embark on a deregulation blitz.
He says: “What I think we will see when we get back to work is deregulation across various industries. Take the Sunday trading laws: if we go back to work in two weeks’ time, the Government should deregulate all sorts of industries for a period of time.
“They could say, you can open at 8am, take money at one minute past eight and close at eight at night, and we are looking at doing this for a year. Restaurants, licensing laws. It is going to be a one-year period – let’s give the economy a big boost.”
He adds: “You have to cut taxes to generate growth and inflation. It is no good suppressing companies by overtaxing them and suppressing individuals. You need to incentivise people. Cut stamp duty, get the housing market moving, let the pubs stay open longer. There is so much we can do. There is so much bureaucracy we have inherited from the EU but now we can do what we like.”
As a big financial backer of Vote Leave, Cruddas has achieved a lifelong ambition with the UK’s exit from Europe. But unlike some Brexiteers, he is not ideologically wedded to an abrupt end to the transition period at the end of 2020, bringing more potential disruption on economies weakened by the virus. He says: “It depends on the terms. The last thing we want to be doing is saddling ourselves with the constraints of the EU. We need to be able to negotiate trade agreements around the world and get the best deals for this country.
“I think it’s not a question of what the UK wants, it is what the EU will need, because the eurozone has been devastated by the coronavirus.
“I’m happy for it to be extended provided it is on very, very loose terms but quite frankly I think we should just cut our losses, get out of it and become a free nation again. Thank God we can print our own money and we have got our exchange rate.”
He thinks some kind of EU fracture is likely. He says: “I think Italy needs to print its own currency, set its own interest rates. I think Spain will need to do the same… otherwise you will just see the disintegration of the EU as it is. If you think we are on our knees, wait until you see what Italy, France and Spain look like after this.”
Cruddas is a long-time Tory donor but far more in tune with the Boris Johnson administration than that of David Cameron, who hung him out to dry after a Sunday Times “cash for access” sting. He successfully fought the paper in court, although the damages were reduced on appeal. Cruddas claims it is “water under the bridge” but the incident clearly still rankles: George Osborne, then the Chancellor, “could have put a word in for me but he didn’t”.
Now, under the new regime, the comprehensive boy turned City millionaire is being linked with a peerage. He won’t comment on that, but can’t resist a quip: “I’ve got more chance than I had with the other lot.”