business. Its parent company, doorstop lender Cattles, has
suspended the sub-prime hire purchase provider’s management team,
and announced that Welcome had breached its banking
covenants.
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
that the group will incur a significant loss before tax for the
year ended 31 December, 2008 and that 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.
One motor finance industry expert said: “Part of Welcome’s
problems stem from the fact that it was buying high-risk sub-prime
and deep sub-prime finance proposals from large dealer groups –
irrespective of whether it ended up writing the deal or not.”
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