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Cattles calls for help in reviewing its bad loans

Cattles has hired accountancy firm Deloitte to help review its provision against bad loans.

The troubled lender, parent of Welcome Finance, has been forced to suspend all lending activity to new customers to preserve its cash reserves.

Welcome, which generated more than 90% of Cattles’ £70.2m first-half profit in 2008, will continue to offer renewal products to existing customers.

Cattles recently issued a profit warning and said its annual profits will be substantially lower than current market expectations, blaming this on the need to write off more bad debts.

Finance director James Corr was due to retire at the end of February but he will now remain in his position until the review has been completed.

This means that Robert East’s appointment to the board as finance director has been deferred until further notice.

Cattles withdrew its application to the Financial Services Authority to take retail deposits in January. It had hoped to secure around £1bn in retail deposits by 2010 once the licence came through.

The company was forced to withdraw its application after it became clear that permission to take deposits is unlikely to be forthcoming until the current uncertainty in the financial markets has stabilised and the terms of the group’s renegotiation of £635m of its bank facilities are known.

At the time David Postings, chief executive of Cattles, said: “Given the turmoil we are seeing in the financial markets, we have taken prompt and prudent action to reduce our costs, conserve our capital and focus our efforts on securing ongoing wholesale funding for the group.”

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