Subprime lender Cattles cuts jobs and costs

LONDON — Subprime lender Cattles PLC said Wednesday it plans to cut 20 percent of its work force and reduce costs to preserve capital as uncertainty over its funding situation continues.

Cattles, which specializes in lending to people who cannot get credit from mainstream banks, said it also plans to reduce new business this year.

Its shares dropped 17 percent to 24.5 pence (37 cents) on the London Stock Exchange.

"We have not taken these decisions lightly and we firmly believe that by cutting costs and preserving capital in the business we can continue to trade profitably, weather the current economic conditions, and continue to serve over 850,000 customers in this important part of the market," said Cattles chief executive David Postings.

The Yorkshire, northern England-based group remains in talks with its bank syndicate about the refinancing of facilities due for repayment in July and with the Financial Services Authority about its application for a retail deposit banking license..

In the meantime, it said it plans to cut around 1,000 jobs within the group and reduce its new business volumes at its Welcome Finance unit by around 75 percent compared to last year.

"In addition to job reductions and the suspension of dividend payments announced in the pre-close trading statement, a range of other cost saving measures will be adopted to conserve further cash over the coming months," it added in a statement to the exchange.

The company said that annual cost savings were estimated at 40 million pounds ($61 million).

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