Bank licence delay for Cattles

FINANCE group Cattles, the sub-prime and doorstep lender, has seen its shares fall after being forced to admit that its application for a banking licence from the Financial Services Authority (FSA) is “proceeding at a slower pace” than expected.
 
Shares in the group, which specialises in lending to those on low incomes, fell 22.3% to 28.75p yesterday on speculation surrounding the lender’s application for a banking licence.

Catttles was known to be looking at rescuing Manchester’s London Scottish Bank prior to its administration this month. A deal would have given the Yorkshire firm its banking licence, but agreement could not be reached with the City regulators on a way forward. 

Cattles said that its banking licence application is taking longer than expected after the FSA tightened its criteria.
 
“Given the current banking environment and market conditions, the FSA is proposing more stringent tests for firms, particularly relating to liquidity and stress testing, on which the FSA has recently issued consultative papers,” it said.
 
“As a result, Cattles’ application is proceeding at a slower pace than the company had previously anticipated,” the statement added.
 
Cattles started the process of being able to take retail deposits in April, when it raised £200m through a rights issue to beef up its balance sheet. It had planned to get a licence by early 2009 and to raise around £1bn of deposits by the end of 2010.
 
The lender, which operates Cattles Invoice Finance across the North West, said it had submitted its detailed business plans to the FSA for consideration and is currently dealing with a number of requests for further information.
 
A final decision on whether Cattles’ application has been granted will not be made by the FSA until its enquiry process is completed.