IG’s bank-recourse client-money pool rose to £616m—one fifth of segregated funds

IG Group’s half-year accounts identify a £616.2 million pool of segregated client money for which the group, rather than only the customer, carries a disclosed bank-credit-loss exposure under Japanese and German law. The pool was equal to 20.4% of all segregated client funds and qualifying money-market-fund balances at 30 June 2026. Six months earlier it was £443.1 million, or 15.5% of the total. The £173.1 million increase was driven entirely by the German balance, which almost doubled to £368.2 million while the Japanese balance remained £248.0 million.[1]

The finding does not mean client money was missing, improperly segregated or impaired. IG reported the balances off its balance sheet, said it had assessed the risk of net credit losses as remote and recognised no provision. The point is more precise: segregation and ultimate loss-bearing are different questions. In two subsidiaries, the legal framework leaves IG with recourse exposure if a bank holding segregated money fails, and the amount inside that framework grew much faster than the group’s total segregated pool during the first half.[1]

Segregation protects ownership; it does not eliminate every bank-failure channel

IG’s note says the Japanese subsidiary, IG Securities Limited, held £248.0 million of segregated client funds. Under Japanese law, the group is liable for credit losses suffered by clients on that segregated balance. IG Europe GmbH held £368.2 million in Germany, where the group is liable for client credit losses above the deposit-protection insurance offered by the local regulator. Those descriptions establish a contingent loss-bearing mechanism at group level. They do not identify a present loss, a deficient bank or a breach of client-money rules.[1]

That distinction is easy to lose because client-money reporting often compresses several layers into the word “segregated.” Segregation generally concerns whether customer assets are separated from a firm’s own property and available for customer claims rather than ordinary corporate creditors. A bank holding the segregated account introduces a different counterparty risk. Deposit insurance, trust or statutory arrangements, diversification and the broker’s own indemnity can determine who bears any shortfall. IG’s accounts disclose that, in these two jurisdictions, the group itself retains at least part of that residual risk.[1]

The half-year movement is real, but its cause is not disclosed

The German balance rose by £173.1 million between 31 December 2025 and 30 June 2026. That is an 88.7% increase. Total segregated client funds and qualifying money-market-fund balances rose by £153.7 million, or 5.4%, over the same period. Because the German increase was larger than the net rise in the group total, balances elsewhere in the segregated pool declined on a combined basis. The filing does not say whether Germany’s movement came from net deposits, transfers between banks or products, foreign-exchange effects, a change in money-market-fund usage, customer migration, or another operational cause.[1]

The longer comparison shows why a six-month figure should not be treated as a straight-line trend. At 30 June 2025 the German balance was already £347.1 million, before falling to £195.1 million at year-end and recovering to £368.2 million by June 2026. The combined Japanese and German pool increased only 8.1% year on year, from £570.2 million to £616.2 million. Its share of total segregated balances was 20.1% a year earlier, close to the latest 20.4%. The exceptional feature is therefore the half-year rebound from the December point, not an unprecedented share of the group total.[1]

No provision is an accounting judgement, not a guarantee of zero exposure

IG concluded that the risk of net credit losses on the Japanese and German balances was remote and therefore recognised no provision. That treatment is evidence of management’s risk assessment at the reporting date. It is not equivalent to saying the gross balances are guaranteed by IG as immediate liabilities, nor does it prove that every pound would be lost in an extreme bank failure. The actual loss would depend on the failed institution, recoveries, deposit-protection coverage, legal set-off and the precise customer-money structure. The accounts do not provide enough information to model those variables.[1]

The £616.2 million figure should consequently not be added to debt, regulatory capital requirements or ordinary payables. It is an off-balance-sheet client-money subset with a disclosed contingent recourse feature. Nor should it be compared directly with IG’s £1.014 billion of balance-sheet cash and cash equivalents: the accounts explicitly say the £3.016 billion segregated pool is held off balance sheet. One measure belongs to the group’s own liquidity position; the other records client funds under protective arrangements. Combining them would blur ownership and risk.[1]

The missing information is concentration, coverage and stress capacity

The note supplies the jurisdictional totals but not the bank-level denominator that would determine concentration risk. Readers cannot see how many banks hold the money, the largest exposure, the maturity or liquidity profile, the amount covered by deposit insurance, the collateral or guarantees available, or the recovery assumptions behind the “remote” conclusion. Those omissions do not make the conclusion wrong; they limit independent testing. A £368.2 million balance divided among many highly rated banks presents a different tail risk from the same amount concentrated at one institution.[1]

The group’s strong reported regulatory-capital position is relevant context but not a substitute for the missing stress bridge. IG disclosed £779.1 million of regulatory capital resources and a 237% solvency ratio at 30 June. Yet regulatory capital is managed against multiple risks across the group, and the accounts do not state how a severe client-money depositary failure would flow through legal entities, liquidity facilities and capital requirements. It would be unsafe to deduct the gross £616.2 million from capital; it would be equally unsafe to assume the liability has no possible capital or liquidity consequence because no provision was booked.[1]

There is also a disclosure-timing issue. The group publishes the client-money recourse balances at reporting dates, while customers and depositary allocations can move daily. The £616.2 million is therefore a point-in-time gross amount, not a measure of average exposure through the half year or the maximum amount reached. A complete risk view would show average and peak balances, bank concentration limits and any intraperiod breaches. In their absence, this investigation uses only the reported dates and does not infer that the June level persisted before or after 30 June.[1]

What the evidence proves

A legal recourse clause is not the same as an expected bank loss

The reported £616.2 million cross-jurisdiction pool was approximately £173.1 million higher than the preceding £443.1 million balance, a rise of about 39%. Yet the overall relevant segregated balance grew on a different base, so the recourse-backed pool’s share of the total rose from 15.5% to 20.4%. These two changes answer different questions: the pound increase measures the nominal size of this subset, while the percentage change measures its importance within the broader client-money system. Neither is a calculation of cash lost or a probability of bank default.[1][2]

The legal distinction is that certain local arrangements can leave the broker economically responsible for a loss arising at a deposit-taking counterparty even though the money is segregated for clients. To assess stress, one would need the underlying deposit bank exposures, account hierarchy, applicable recourse provisions, protections and duration of balances. A £616 million gross pool is not a £616 million expected loss. Nor does the existence of recourse prove the broker is failing to comply with segregation rules; it describes where a specific risk would ultimately sit under the contracts and local law.[1][2]

The documentary conclusion is bounded but material. At the half-year date, roughly one pound in five of IG’s segregated client-fund and qualifying money-market-fund pool sat in Japanese and German arrangements where the group disclosed residual liability for bank credit losses. The subset rose 39.1% in six months, primarily because the German balance rose 88.7%. IG judged the net risk remote. Nothing in the filing indicates that a bank had failed, that clients faced a current shortfall or that segregation rules were breached.[1]

To evaluate the finding, IG should be asked to explain the German movement; identify, at least in concentration bands, how the £616.2 million was distributed among depositaries; quantify the portion protected by statutory insurance or other safeguards; describe the stress assumptions supporting the remote-risk judgement; and state whether the recourse exposure is incorporated into internal liquidity and capital scenarios. A response showing broad bank diversification, substantial insured coverage or enforceable recovery protection would reduce the practical significance. Without that bridge, the accounts establish a growing legal exposure but not its probable loss.[1][2]

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