Cattles drops banking plans

FINANCE group Cattles has dropped its plans for a banking licence which would allow it to take deposits.

The move was a key part of the strategy of the sub-prime and doorstep lender which had said it wanted to attract £1bn of deposits by 2010.

However it said it had withdrawn its application for permission to take retail deposits after it was told by the Financial Services Authority (FSA)  that a licence was unlikely to be granted until the “unprecedented turmoil in the financial markets has stabilised” and the terms of its renegotiation of £635m of bank facilities has been finalised.

Cattles, based at Birstall near Leeds, said that it has withdrawn its application “until such a time as there is greater clarity on both these matters”.

Discussions are ongoing with its bank syndicate regarding the refinancing of facilities due for repayment in July.

David Postings, chief executive of Cattles, said: “Given the turmoil in the financial markets we have taken prompt and prudent action to reduce costs, conserve capital and to focus our efforts on securing ongoing wholesale funding for the group. Demand for our products remains strong and the group continues to trade profitably and in line with expectations.”

Earlier this month the group revealed plans to cut around 1,000 jobs and shut its Hull office where around 400 staff are employed.

Cattles cancelled its final dividend of 2008 as well as this year’s interim payout in a bid to save cash.

The group, which also runs the Cattles Invoice Finance subsidiary which has offices in Manchester and Liverpool and is up for sale, said the cost-cutting measures would save around £40m a year and would help to ensure that the company remained profitable.

Cattles started the process of being able to take retail deposits last 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.