Section:GDN 1N PaGe:43 Edition Date:190830 Edition:01 Zone: Sent at 29/8/2019 19:04 cYanmaGentaYellowb
Friday 30 Aug ust 2019 The Guardian •
Financial^43
Amigo shares crash after City
crackdown on guarantor loans
Kalyeena Makortoff
Banking correspondent
Shares in the loans group Amigo
plunged more than 50% after it warned
growth would come to a halt because
of a n impending crackdown by regula-
tors and the rising risk of an economic
downturn sparked by a no-deal Brexit.
Amigo specialises in guarantor
loans, which use friends and family
to guarantee repayments on loans to
people who might otherwise strug-
gle to borrow. The lender said it now
expects no growth in its loan book as
it adopts a “more conservative view”
on lending. It also warned it would be
setting aside more cash as provisions
to cover a rising number of customers
falling behind on repayments.
The FTSE 250 fi rm added that its
new forecasts “refl ect the increased
probability of a no-deal Brexit and the
corresponding eff ect this is expected
to have on the economy and on con-
sumer sentiment.”
It said: “While past recessions have
demonstrated the resilience of our
business, we believe it is prudent to
factor a deteriorating economic out-
look into our impairments model. We
will continue to monitor the potential
impact and will review our position
again at the half year.”
Amigo shares tumbled 51% to trade
at 7 0p in afternoon trading.
The falling share price is bad news
for investors including the belea-
guered fund manager Neil Woodford
and his former employer Invesco.
Woodford Investment Management
recently sold nearly half its stake, leav-
ing it with an 0.8% holding.
Amigo said it will now focus on
fi nding new customers rather than
handing multiple loans to existing bor-
rowers. The move is in anticipation of
a crackdown by City regulators, who
warned earlier this year that they were
monitoring guarantor loan companies
because of the increasing number of
guarantees being called in.
The Financial Conduct Authority
has raised concerns over the practice
of re-lending to existing borrowers,
and the risk of customers getting
caught in a c ycle of persistent debt
with sky-high interest rates.
Amigo, which offers guarantorLSE listing for
Saudi Aramco
may be ruled
out by UK
instability
Jillian Ambrose
Energy correspondent
Saudi Arabia’s revived plans for a
$2tn mega-listing of its state oil com-
pany may rule out the London Stock
Exchange amid Britain’s rising politi-
cal uncertainty, according to reports.
Saudi Aramco, the world’s most
profitable company , may instead
look to Japan’s Tokyo stock exchange
to host the second phase of what
would be the biggest public off ering
in history.
The oil giant’s advisers had origi-
nally favoured an international stock
market debut in either London or
Hong Kong but political instability
has reduced their appeal, according
to the Wall Street Journal.
The report said people familiar with
Saudi Aramco’s plans expect the com-
pany to split the listing into two stages :
the fi rst on the Saudi stock exchange
later this year, and the second in 2020
or 2021.
The decision to rule out London and
Hong Kong would be a blow to both
fi nancial centres, which have courted
the mega-fl oat since it was announced
in early 2016. Last year the UK’s City
watchdog changed its listing rules, in
a move widely viewed as designed to
encourage Aramco to list in London.
The plan to sell 5% of the oil giant’s
Claimants face
online glitches
and call delays
in rush to beat
PPI deadline
▲ Saudi Aramco’s Ras Tanura
refi nery. The state oil giant is the
world’s most profi table company
PHOTOGRAPH: AHMED JADALLAH/REUTERSRupert JonesConsumers making last-minute
claims for mis-sold payment protec-
tion insurance (PPI) have had to deal
with crashing websites and jammed
phone lines as banks struggled to cope
with an 11th-hour surge in complaints.
While the fi nal deadline for mak-
ing a claim was 11.59 last night, the
problems prompted the Financial Con-
duct Authority to say that “where a
fi rm knows that customers may have
had trouble accessing their services
(whether website or phone) ... then
we would expect them to apply a
pragmatic approach to dealing with
complaints received immediately
after the deadline”.
Several banks had problems with
their websites, with some potential
applicants being confronted with
“internal server error” messages. The
glitches were blamed on exceptionally
high web traffi c.
Santander apologised for “a brief
technical issue earlier this morning
[29 August]” , which meant custom-
ers were unable to access its online
PPI claim form. The bank said: “This
has now been resolved and we’re sorry
for the inconvenience caused to cus-
tomers.” Nevertheless, some people
continued to report problems with the
bank’s website.
The Co-operative Bank said its
online PPI form was “intermittently
unavailable between 1.15pm and
2.45pm due to a technical issue”. It
added it was continuing to monitor
the availability of the form.
At NatWest, some potential com-
plainants who clicked on its PPI form
were greeted by a message saying:
“Due to system problems, we are
unable to progress your application
at present ... Please try again later.”
Meanwhile, customers of several
banks reported long waiting times to
get through on the phone.
On Twitter, one customer asked
Royal Bank of Scotland: “why can’t
I get through to your PPI line?????????
Says busy kept trying! Ongoing
claim....not good enough!” Another
asked RBS : “Why isn’t PPI number
working!!!! #Dodgy .” The bank replied :
“ This is due to the high call volumes.
Please try again later ...”
Martin Lewis, founder of the
MoneySavingExpert website, had
warned that some sites could crash.stock was originally expected in 2018,
but a sluggish oil market recovery and
fi erce debate over how much to raise,
and where, has stalled the plan.
The IPO was dealt another blow in
October last year after outcry over the
murder of the Saudi journalist Jamal
Khashoggi inside the Saudi consulate
in Istanbul.
The Saudi energy minister, Khalid
al-Falih , reignited plans for the fl oat
earlier this summer after announcing
that offi cials were working to list the
company within the next two years.
Aramco announced earlier this
month, in its fi rst investor call, that
it was ready for the listing wheneverloans at a rate of around 49.9% APR,
said 12% of its customers have topped
up their Amigo loan more than twice.
It tends to off er between £500 and
£10,000 paid back over one to fi ve
years. The fi rm has 210,300 customers.
The company, which has seen a
jump in customer complaints and
an increase in those being upheld by
the fi nancial ombudsman, said it wasnow tightening its eligibility criteria
in order to “stay ahead of regulation.”
“The change in economic out-
look, and the potential for regulatory
change, means we are taking a more
cautious approach to lending and have
increased provisioning,” Amigo said.
Amigo fl oated on the London stock
market in August 2018. The shares
were priced at 275p, valuing the busi-
ness at £1.3bn. They have now lost 74%
of their value, making them one of the
worst-performing recent fl otations,
along with peer-to-peer lender Fund-
ing Circle and luxury British carmaker
Aston Martin.
Amigo’s founder, James Benamor,
cashed in shares worth £200m, and
his Richmond Group still owns some
60% of the shares.
Russ Mould, investment director at
AJ Bell, said: “The outlook contains
quite a few shocks including a warning
that impairments are likely to remain
at a higher level, the ratio of cost to
income is going to rise, and there could
be a hit to repeat lending.
“Amigo argues that it provides a
valuable product that helps improve
people’s lives, yet the business is so far
failing to reward shareholders. The lat-
est update would suggest something
is going very wrong.
“The market was already worried
about regulation becoming tighter
for the guarantor loans market, and
today’s update from Amigo makes
matters even worse, suggesting it has
some very dark days ahead.”its shareholders agreed market condi-
tions were “optimal”.
The company reported profi ts of
$46.9bn (£38.5bn) for the fi rst half of
this year, down from $53.2bn in the
fi rst half of last year owing to lower
oil prices. The earnings were still well
ahead of the world’s six biggest listed
oil companies combined.
The once secretive oil behemoth
opened its books to international
investors for the fi rst time last year
before a record-breaking sovereign
bond market debut. The debt issuance
raised $12bn as result of overwhelm-
ing interest from major international
investors.$46.9bn
Saudi Aramco profi ts for the fi rst
half of this year, down from $53.2bn
last year as result of lower oil prices▲ Website failures and phone queues
caused headaches for PPI claimants▲ Amigo’s founder, James Benamor,
has cashed in shares worth £200mRELEASED BY "What's News" vk.com/wsnws TELEGRAM: t.me/whatsnws