Saviour sought for Forfaiting

Investors approach former Guinness Mahon chairman to take helm at ailing trade financier

DAVID POTTER, the former chairman of Guinness Mahon, the merchant bank taken over by Investec of South Africa, has been approached to take the helm at the troubled trade financier London Forfaiting.

The approach, understood to come from leading investors, would see Mr Potter replace Stathis Papoutes, the chief executive of the company. Mr Papoutes, a Greek Cypriot, was one of the two founders of the group along with Jack Wilson when they led a team of traders who had previously been at Hungarian International Bank in 1984.

The two masterminded London Forfaiting's flotation on the stock market in the late 1980s. However, the company has had a topsy-turvy ride which has seen its shares reach 481.5p before falling to a low of 29.5p earlier this month. The shares closed on Friday at 33.5p, valuing the group at only pounds 35m.

Mr Potter is believed still to be considering the offer, while other leading figures in trade finance have also considered moves to take control of London Forfaiting.

The plan to bring in Mr Potter followed the collapse of a secret deal with the Bank of Piraeus, in which the recently privatised Greek bank would have pumped around pounds 10m into London Forfaiting in an attempt to refinance the ailing company.

London Forfaiting has written off nearly pounds 130m on assets it was unable to sell.

Its first write-off at the beginning of this year, for pounds 79.7m, was heavily criticised for not being prudent enough. The company subsequently asked its auditors, Deloitte & Touche, to conduct a review. This led to a further provision of pounds 29m.

Sources in trade finance expect the company to an- nounce further write- offs when it releases full-year figures in the new year.

The write-offs mean that London Forfaiting is short of capital to allow it to trade. This has led to problems with overheads, and although Mr Wilson and Mr Papoutes agreed to salary cuts and promised to make job reductions, the company is believed to be trading at a loss.

The deal with Bank of Piraeus is understood to have foundered on the price that the Greek bank was prepared to pay for shares in London Forfaiting.

The trade finance group has often bemused the City, which has not got to grips with the financial instruments, forfaits, that form the basis of its business. But in recent years the company has become involved in less exotic types of trading, including bond deals and syndicated loans, mostly for countries in the former Soviet Bloc.

Many of London Forfaiting's problems stem from these businesses, which have been hit by many newly privatised trading companies in Russia defaulting on their loans.

No one from London Forfaiting returned telephone calls from The Independent on Sunday last week.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss