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Amigo Not Interested In Provident Financial; Hits Back At UK FCA

LONDON (Alliance News) - Amigo Holdings PLC said after market close Friday it has no intention of ...

Alliance News 22 March, 2019 | 6:45PM
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LONDON (Alliance News) - Amigo Holdings PLC said after market close Friday it has no intention of making an offer for Provident Financial PLC.

Amigo said it is "committed to a mid-cost credit strategy" so will not be making an offer for FTSE 250-listed Provident.

Provident is currently fending off a hostile all-share takeover offer worth GBP1.3 billion from smaller peer Non-Standard Finance PLC.

Provident's board has strongly urged its shareholders to take no action in respect of the offer describing it as "strategically and financially flawed".

Amigo, which provides loans to those with poor credit ratings, also responded to a letter sent by the UK Financial Conduct Authority at the beginning of March to the chief executives of firms offering high-cost lending.

The watchdog said these firms should consider the degree to which they present risk and how they can mitigate that.

The two key risks the FCA uncovered in its assessment of high cost lenders was: a high volume of re-lending, which "may be symptomatic of unsustainable lending patterns"; and insufficient affordability checks these firms have in place, leading to loans being issued that customers may not be able to afford.

An additional risk factor highlighted by the FCA was the the proportion of loan repayments that guarantors make has "risen considerably", indicating that affordability on the part of the borrowers is falling.

Amigo responded Friday saying its number of payments made by guarantors as a proportion of total payments rose "very slightly" in financial 2018 and was in line with economic conditions, and has "remained broadly constant" during the current financial year at just under 10%.

Amigo added the number of loans where the guarantor makes one payment or more in a given year has also remained "broadly constant", with a "small rise" in financial 2018.

Amigo said its affordability criteria remains "fundamentally unchanged" since a "thorough review" when it obtained FCA authorisation in 2016.

Shares in Amigo closed down 3.1% Friday at 173.22 pence each. Provident shares closed down 0.9% at 522.60p.

By Paul McGowan; paulmcgowan@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Amigo Holdings PLC 79.00 GBX -0.63 -
Provident Financial PLC 445.00 GBX 1.95 -

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