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Shares in Cattles fell by as much as 36 per cent after the sub-prime lender announced plans to cut 1,000 jobs and issue fewer loans in an effort to cut costs and save cash.
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The reduction in headcount constitutes 20 per cent of the workforce, and the decision to cut back on loans means that the volume of credit advanced through the group's Welcome Finance division will be reduced by 75 per cent from 2008 levels. This will inevitably hit profits for 2009, although results for 2008 will still meet expectations.
Cattles has yet to secure the banking licence it needs to accept retail deposits so it can reduce its reliance on wholesale funding. Discussions with the Financial Services Authority continue, as do talks with its banking syndicate over the refinancing of facilities due for repayment in July. The shares are down nearly 90 per cent from last year's peak and, at 27p, remain high enough.
Last IC View: High enough, 20p, 17 Dec 2008
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