Cattles withdraws banking licence application

by Gill Montia

Story link: Cattles withdraws banking licence application

Cattles, the Yorkshire-based sub-prime lender, has withdrawn its application for a banking licence.

The move follows discussions with the Financial Services Authority, which has recently tightened its capital reserves criteria.

The lender raised £200 million in a rights issue last year to ensure it had sufficient capital adequacy to qualify for the licence, which would have allowed it to expand into deposit-taking and fulfil plans to raise around £1 billion in retail deposits by 2010.

The company now says that the licence is unlikely to be granted until the financial markets have stabilised and the terms of its renegotiation of £635 million of bank facilities are settled.

Earlier this month Cattles announced that volumes at its principal lending business, Welcome Finance, are expected to decline by up to 75% in 2009.

The unit has around 500,000 non-standard customers and provides direct repayment loans from 183 branches across the UK.

The lender therefore plans to reduce costs by around £40 million and is cutting 1,000 jobs, or 20% of its workforce.

According to Cattles, 2008 profits should meet market expectations but deteriorating trading conditions will have a negative impact on profitability in 2009.