Rothschild to investigate ways it could divest its invoice finance
business.
The bank’s spokesperson today confirmed the sale is aimed at
“plugging the gap” in the amount of its available regulatory
capital reserves.
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The move follows the sale last June of its leasing business,
Manor Credit, to the Davenham Group for £25.1m.
Last New Year’s Eve the bank announced it faced a shortfall in
its capital reserves as a result of increased impairments against
some of its customers, mainly in its unsecured consumer credit
branch. It stated that this would affect its profit and loss
account to the tune of £22m, although since then it announced it
expected losses will be slightly less than this.
On the same day it revealed that as a result of these
impairments, combined with an increase in the amount of cash
reserves it must hold under Basel II, that it had a shortfall of
£13m in the amount of regulatory cash reserves it held.
The bank since has submitted to the Financial Services Authority
a plan to remedy its regulatory capital shortfall, and has
announced it is “examining a number of financing alternatives to
increase its capital base”.
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By GlobalDataThe sale of its factoring business – which according to latest
accounts has profits before tax of £1.6m – will go only some way to
increasing its capital reserves.
