Ashley’s wrong call on gamble could be costly

Mar 25 2008 by Iain Laing, The Journal

NEWCASTLE United owner Mike Ashley is believed to have lost millions of pounds on a share bet on Halifax Bank of Scotland.

The retail millionaire is understood to have placed a succession of bets late last year with spread betting firm IG Index that Hbos’s share price would rise in the early part of 2008.

But the UK’s biggest mortgage lender’s stock has instead fallen more than a third since the beginning of January – a slump said to have left the Sports World tycoon nursing losses running into tens of millions of pounds.

Ashley gained £929m in a single day from floating part of his sportswear chain in February last year. The reported losses contrast with the profitable investments he has made in rivals such as Umbro and Adidas.

Hbos has suffered amid concerns over the impact of the credit crunch and a slowing housing market, but was also the victim of unfounded market rumours over its funding last Wednesday.

This caused its share price to plummet almost 20% at one point and prompted intervention from the Bank of England and the City’s watchdog, the Financial Services Authority.

About 250 Hbos directors and senior staff snapped up more than £6m-worth of the bank’s shares the day after the dramatic price collapse in an effort to shore up the stock.

Chief executive Andy Hornby led the way in what the bank said was a “demonstration of confidence” in the stock, splashing out more than £400,000 on 92,812 shares with his annual cash bonus on Thursday.

But the bank’s share price has fallen to less than half the level of 12 months ago after the financial turmoil which erupted last summer, leaving Hbos with a current market value of £17.7bn.

IG Index and Mr Ashley’s Sports Direct International were unavailable for comment yesterday.