42 1GM Tuesday October 20 2020 | the times
Business
Amigo must seek permission from the
Financial Conduct Authority before it
pays dividends to shareholders or cash
bonuses to its bosses after the City
regulator tightened its oversight of the
troubled guarantor lender.
The provider of high-interest loans
A plan to find £100 million of savings at
TSB by cutting hundreds of jobs and
branches will be pushed through faster
than originally planned, the Spanish
owner of the high street banking
business has said.
Jaime Guardiola, the chief executive
of Banco Sabadell, told an event yester-
day that an overhaul of TSB originally
slated to take three years was now likely
to be finished by next year.
The cuts have already been painful
for TSB, which announced last Novem-
ber that it wanted to achieve £100 mil-
lion in cost savings by 2022. Its branch
network has been pared back signifi-
cantly from 631 sites seven years ago.
The bank said last month that it
would shut 164 branches with the loss
of about 900 jobs, to leave it with 290
sites by next year. These cuts are on top
of the 82 branch closures and 370 job
losses it announced the year before. ItTSB owner sets earlier target
to complete branch closures
is grappling with the fallout from the
Covid-19 crisis, which has pushed more
banking customers online.
Mr Guardiola said: “In the UK, we
will likely bring forward the cost reduc-
tion plan that was intended to be
achieved in three years to two years,
and complete the whole reduction
process in 2020 and 2021.”
There has been speculation in the
City that the Spanish group will try to
sell TSB once the UK business has been
overhauled. Rumours have also circu-
lated that Sabadell could merge with its
Spanish rivals BBVA or Santander.
TSB can trace its roots back to the
foundation of the Trustee Savings Bank
in 1810.
It later became part of Lloyds Bank-
ing Group, which in 2014 listed TSB on
the stock exchange to meet European
state aid rules following its taxpayer
bailout during the financial crisis.
Sabadell struck a deal to buy the bank
for £1.7 billion in 2015.Ben Martin Senior City Correspondent
Amigo must seek approval
to pay dividend or bonuses
revealed yesterday that it had entered
into an “asset voluntary requirement”
with the watchdog, which imposes
restrictions on Amigo’s ability to make
transfers “outside the group in certain
circumstances”.
It means the subprime lender must
secure the approval of the regulator if it
is to make any discretionary cashpayments to directors or distribute
dividends to investors. Shares in Amigo
tumbled 11.8 per cent to 9¼p.
Amigo was valued at £1.3 billion
when it listed in London in 2018 but its
stock has since slumped amid mount-
ing regulatory scrutiny, rising customer
complaints and a dispute with James
Benamor, its founder. It had a marketcapitalisation of just £43.8 million last
night.
Amigo is Britain’s biggest guarantor
lender, offering loans of up to £10,000 at
annual interest rates of 49.9 per cent to
people with weak credit histories.
These loans are guaranteed by another
individual, usually a friend or relative of
the borrower, who is liable if repay-
ments are missed.
Amigo revealed in June that it was
under investigation by the FCA, which
is examining the way Amigo has been
assessing the creditworthiness of its
customers since November 2018.
The regulator has been voicing con-
cerns about the broader guarantor
loans market since March last year, in-
cluding worries about an increase in
the proportion of guarantors making
repayments on behalf of borrowers.
The Financial Ombudsman Service
has also taken a tougher stance towards
Amigo over customer complaints
about its loans, which have surged in
volume over the past year.
Amigo sought to reassure sharehold-
ers yesterday that the latest move by
the FCA “does not impact the day-to-
day running of Amigo or its ability to
continue to pay down debt”.
The FCA did not comment. The reg-
ulator said in a publication last year that
it could invite companies to sign volun-
tary requirements “in instances where
we have evidence that firms are not
meeting our standards” to prevent
harm to consumers or markets.
An Amigo source said the “asset vol-
untary requirement” was linked to the
lender’s recent clash with Mr Benamor,
who had attempted a boardroom coup
by asking shareholders to appoint him
as Amigo’s boss. His plan failed when
57 per cent of investors last month op-
posed his return to the board.
Gary Jennison was last month
appointed to lead Amigo and is now
trying to repair its relationship with the
regulator. It is thought that agreeing to
the “asset voluntary requirement” is
part of those efforts.
The lender said yesterday that it “is in
regular and productive dialogue with
the FCA to restore confidence follow-
ing the events of recent months”.Ben Martin Senior City Correspondent
L
egal & General has
strengthened its ties with
the University of Oxford
with £200 million worth of
funding for life and mind
sciences (Robert Miller writes).
The FTSE 100 insurer willL&G invests
£200m in
new Oxford
science unit