Cattles, the sub-prime lender, has abandoned its attempt to gain a banking licence after the Financial Services Authority made it clear it would reject the application.
Cattles said it would now concentrate on refinancing bank loans that are due for repayment in July, but suggested that it could renew its attempt to gain a licence once that funding is secured.
Cattles said: “It has become clear that [FSA] permission is unlikely to be forthcoming until the unprecedented turmoil in the financial markets has stabilised and the terms of the group’s renegotiation of £635m of its bank facilities are known.”
The lender’s severely weakened shares fell 28 per cent to 13p on the news.
“The timescale to achieve the refinancing is beginning to appear heroic andtheshare price is expressing reservations that it can be achieved,” analysts at FinnCap said. “Despite the core business continuing to trade satisfactorily, the uncertainty over the refinancing will dog the shares until resolved.”
Cattles was seeking a banking licence to allow it to raise retail deposits and replace bank lending as a source of funding for its loans.