Welcome Financial Services has ceased new
business. Its parent company, doorstop lender Cattles, has
suspended the subprime hire purchase provider’s management team,
and announced Welcome had breached its banking covenants.
Cattles is to restate its 2007 results, and has
issued a profit warning for its delayed 2008 figures, having
previously predicted it would turn a profit.

Accountancy firm Deloitte, auditors for Cattles, and law firm
Freshfields Bruckhaus Deringer were called in to investigate the
goings-on at Welcome.

Cattles stated: “Based on information received to date, and
subject to completion of its external audit, the board believes the
group will incur a significant loss before tax for the year ended
31 December, 2008 and it will be necessary to restate the group’s
financial statements for the year ended 31 December, 2007.”

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The suspended senior staff at Welcome are: John Blake, managing
director; Peter Miller, finance director; Mick Belcher, operations
director; and Adrian Cummings, compliance and risk director.

James Corr, finance director of Cattles and Ian Cummine, group
chief operating officer and chairman of Welcome Financial Services
have also been suspended.

The firm’s shares have dipped as low as 1.01p, from a 52-week
high of 261.5p.

Royal Bank of Scotland, head of Cattles’ funding panel,
comprising 22 lenders, could lose up to £500 million thanks to its
exposure to the troubled finance house, it was reported.

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One motor finance industry expert said: “Part of Welcome’s
problems stem from the fact it was buying high-risk subprime and
deep subprime finance proposals from large dealer groups –
irrespective of whether it ended up writing the deal or not.”