Close Brothers Share Discussion Threads

[blueclyde] 22/2/2024 12:16

I am even more bullish now reading Charlie Nunns comments. He believes this is nothing like the PPI scandal and would have had the best lawyers looking at this. Even if you assume the very worst, it looks like Lloyds would contest it and would be a court case spanning years so would be ample time to make provisions.

[chriss911911] 22/2/2024 12:05

Gosh this goes up and down faster than a hookers knickers, judging by the Lloyds provision, who are we to argue, would put close bros below even the low end of estimates, business certainly is looking up, and no, I'm still talking about the hooker. That said price is nothing to do with valuation, near term it is panic, policy, and procrastination, rather than buy, profit and sell, no one is selling at a meaningful profit at these levels, save day trading spivs.


Don't think £8 will happen anytime soon but that is too cheap if we believe Lloyds, but don't see anything like that until dividend resolved, as you will not get that group of investors reactivated without it, the valuation is predicated on income model, it's hard to value as is.

I think we know where the big action is, and it is below £3 or above £6, as I do think there are now a lot of weak speculative holders, who would be out for a quick turn, not as quick as the hooker, but quick.

Better to see it out until next year, if you want a fair valuation if you can handle the ups and downs inbetween.

[brucie5] 22/2/2024 11:53

A return to £8 would be most agreeable.

[cyberbub] 22/2/2024 11:39

The company must be working on scenarios for the cost impact. If they say in the results statement that their upper estimate is less than the 2024 divi cancellation, then I agree that logically the shares should return to (or close to) the previous 800p level within weeks or a few months at most.No advice intended of course. There's still a fair amount of uncertainty with CBG shares...

[pj84] 22/2/2024 11:25

Some excerpts from the above article;

...

"Chief executive Charlie Nunn rejected the analogy, which has been made by figures including the consumer champion Martin Lewis, as he made the provision alongside Lloyds’ annual results.

Mr Nunn said: “We think this is a very different situation.” Lloyds had to pay almost £20bn over the PPI scandal, which crippled the bank for many years.”"

...

"Mr Nunn stressed that motor finance was a “really important” financial service and the scale of motor finance loans made to customers was lower than those in the PPI redress scheme."

...

"He also said customers also held loans for a shorter period.

“The total amount per customer from a lending and exposure perspective is less so we don’t think this is like prior remediations,” he added."

[brucie5] 22/2/2024 11:24

Bought a few back; in light of the LLOY provision this does seem oversold. And it could go up almost 100% and still be below the 50sma. Needs watching though - still very much subject to known unknowns and perhaps some unknown unknowns.
;)

[blueclyde] 22/2/2024 11:01

Exactly. Black Horse the motor finance arm of Lloyds was by far the biggest player in the industry and the lawyers at Lloyds have decided on £450 million to fix it but stating this may not even be due.Meanwhile Close Brothers has lost a billion in market cap value alone. I do not see how this lasts one way or another it will either get taken out or move back up to the price this all kicked off at.

[sandeep67] 22/2/2024 09:54

yes, the clueless seem to think CBG is bigger than Lloyd's with there daft sky high comp valuations.

[cyberbub] 22/2/2024 08:46

Setting aside the compensation issue, the results should be decent based on the trading statement. Hopefully heading back to 400-450p before then IMO.They said they'll provide an update on the compensation issue with the results. Hopefully they can give their own assessment of the likely range of impacts.

[tsmith2] 22/2/2024 08:42

Half Year Results 202419 March 2024

[pre] 22/2/2024 07:50

Well thought out reasoned post copied below compared to some of the rubbish posted by shorts here:

blueclyde22 Feb '24 - 07:22 - 833 of 834
0 5 0
RBC had estimated Lloyds Bank could be facing a 2 billion hit but Lloyds results have a £450 million charge booked including the costs of fixing it and stressing that the compensation may not even be due. RBC had estimated £50 to £150 million for Close Brothers based on the Lloyds provisions would be £10 to £30 million. So you can see how this could make the sell off look utterly ridiculous.

[jonnybig] 22/2/2024 07:25

Totally agree. Looking for a big rise here today.

[blueclyde] 22/2/2024 07:22

RBC had estimated Lloyds Bank could be facing a 2 billion hit but Lloyds results have a £450 million charge booked including the costs of fixing it and stressing that the compensation may not even be due. RBC had estimated £50 to £150 million for Close Brothers based on the Lloyds provisions would be £10 to £30 million. So you can see how this could make the sell off look utterly ridiculous.

[flyfisher] 21/2/2024 22:09

I read an additional twist, in that some introducing brokers signed an imdemnity to the finance companies.

It states in the CBG accounts that they have broker indemnity for premium financing, but does not mention vehicle finance.

Perhaps some dealers who gave an indemnity will be in trouble.

[blueclyde] 21/2/2024 21:17

It is perfectly possible nobody needs to pay anything.

[popit] 21/2/2024 21:04

Anyone know if the banks like CBG and Lloyds are going to be 100% responsible for any compensation that FCA says has to be on paid to customers?

Do no other parties such as the motor retailers have any responsibility here? I thought they were also making a lot of extra commission and profits from charging their customers too much?

So should they not have to pay their share of compensation to the customers?

Or does the whole compensation have to be paid by the banks like CBG and Lloyds?

[blueclyde] 21/2/2024 20:50

Lloyds Bank results tomorrow should give more on the subject. I think people are forgetting there are bigger players involved with enough spare billions to fight what looks far from a clear cut case. Also the Martin Lewis nonsense may alert the FCA that this risks being a free for all with everyone milking it for what they can get knowing full well what they were getting into and decide not to go down that route..

[velocytongo] 21/2/2024 20:35

Pop it, as I suggest, watch the Martin Lewis Show, he’s all over this. I’m just saying £750m is probably the worst case and it’s clear that Cannacord and UBS are in the same ball market. I think there are a range of outcomes depending on the FCA. I’ve no idea how this plays out but this range is clearly in the S/P. There is a reason it is trading at such a discount to NTA.

[sir_shortdalot] 21/2/2024 19:48

Good for £5 in the next few months, oversold

[popit] 21/2/2024 19:47

Woozle

Well your figure of £ 750 million is 3x the highest figure that I have seen from any of the analysts who follow CBG and so it does not really make a lot of sense

And where does it say the bank or CBG would have to pay the whole fine of £ 750 million? Are the motor dealers not also responsible for some of the fault? Will they not also have to pay a part of the £ 750 million?

[sandeep67] 21/2/2024 19:46

whatever the answer Loans will get very expensive if FCA hammer the industry hard and wha if CBG say they did not do DIC's?Still a numbers game and noone really knows the numbers FCA will come out. They get it wrong the consumer will be hit hard after to recoup the losses.

[woozle1] 21/2/2024 19:24

I wrote these were guesstimates but I will explain my workings. I said £750m was prob the worst case but see below before calling it absurd.

CBG's current car finance loan book is c£2bn with av loan size of £7k (all in the annual report) with av life of 4 years.

That means the total no of borrowers c.285k (2bn/7k).

Assuming cumulative interest on each loan is £2k (source: Martin Lewis) and that the overcharge is £1k (again, ML). In his example, the over-interest was £1,100 but the loan was nearer £7,500.

Over 4 years (that's the av life) that's £285.7m (285k x £1k), over 8 years £571.4m, and over 10 years £714m. And that's before the extra admin costs of dealing with the problem. This will not be cheap to administer! It all depends on how far the FCA wants to go back with the choice being 2007 and 2014. No one knows the answer at this stage.

If the FCA says that these firms have to proactively pay out customers (as opposed to customers having to apply) then a figure near £700m could be real. As I said, ML views this as unlikely as it has only happened twice and the companies volunteered it. That said, the FCA has become more interventionist (e.g. telling investment platforms they have to pay more interest) and it may want to send a strong signal that they will not tolerate this type of behavior. The person from the FCA said they had not decided what to do as regards redress.

In my workings, I have assumed that there is an overcharge on every single loan and that it is £1k. I think it is likely there is an overcharge on most of the loans as there were plenty of finance companies who were not paying this type of commission.

The point is at the bottom end no rights issue (it would be covered by excess capital and earnings in this and future years and a consumer-led redress would take years and not everyone would apply). At the top end, there will be one, especially if every customer has to be approached by Close and the resulting shorter payment window.

In any event, we should all know by 25th September as this is the date by which the FCA wants to complete the investigation.

I would strongly advise anyone interested to see the ML program from 6th Feb (it's only 20 minutes)on ITV, which explains the situation very clearly from the customer's position.

By the way, I'm just trying to work out whether or not to take a position. My view is that the redress will likely be consumer-led and there will be a rights issue just in case and that within 3-5 years CBG will be being back shares at a much higher price.

[dplewis1] 21/2/2024 19:21

Canaccord tried to buy the wealth management arm of CBG last year.. maybe they're exaggerating it to get the price down lol

[popit] 21/2/2024 19:02

Most estimates are around this level but both UBS and Canaccord (today) quote around £800-900 million as their worst case scenario. Canaccord reckon they could pay over £400 million(no dividend for years).

Where is the evidence for these figures of £800 million or £900 million?

And where is the evidence for £400 million?

Please post some of the UBS and Canaccord details here as the information is not available on the internet

Without any evidence it just sounds like you are making up figures lol

The highest estimate that I have seen anywhere is £250 million

[cyberbub] 21/2/2024 18:59

Have you got a web link to the two estimates you mention Elsa?