Credit, Collections & Insolvency News
Non-Standard Finance (NSF) has been warned by the Financial Conduct Authority (FCA) that its plans to shake up Provident Financial if it succeeds with its £1.3 billion hostile bid must not result in customers being exploited for higher profits. The FCA said borrowers’ rights must be protected and lending rules cannot be relaxed. FCA retail lending chief Philip Salter, in a letter to NSF, said: “Any change in controls or a shift in culture towards one that is driven by profits and incentives at the cost of good customer outcomes, resulting in unaffordable lending, will be something we act on immediately.
Non-Standard Finance (NSF) has announced still intends to pursue its proposed takeover bid. During a preliminary announcement of its full-year results, NSF said it will capitalise on its operational and commercial success by acquiring Provident to ‘unlock substantial value for all shareholders of, and stakeholders in, both Provident and NSF.’As part of the transaction, NSF intends to complete a demerger of its home credit business, Loans at Home, to assist with the Competition and Markets Authority (CMA) competition approval process and for Loans at Home to be admitted to trading either on the Main Market or on AIM.
NSF claims that the demerger will allow Provident shareholders who participate in the transaction, as well as existing NSF shareholders, to receive shares in the newly-listed Loans at Home.
Earlier this week, Provident unveiled its growth plan and announced that NSF’s offer “should be firmly rejected” as it is not in the best interests of Provident’s shareholders. Patrick Snowball, Chairman of Provident, said “Its offer undervalues Provident, has major strategic flaws, contains a number of misguided assumptions about the Provident business and includes future plans which we consider to be fraught with execution risk and which, as NSF themselves state, are subject to a post-completion review.”
“The existing management team has stabilised the business in a very turbulent period over the past 18 months, which has required addressing managerial mistakes of the past, and now has a clear strategy for delivering attractive returns to shareholders.”
“Now is not the time to be distracted from delivering on the potential of the Group for all of our shareholders by an unattractive offer, which reveals a lack of commercial logic and regulatory understanding and would have significant execution risk.”