Close Brothers Share Discussion Threads

[sbb1x] 20/9/2024 15:35

Dirty close @431My get these for under 400 next week

[tsmith2] 20/9/2024 15:26

*excellent top up opportunity

[tsmith2] 20/9/2024 15:18

Excellent top position

[chriss911911] 20/9/2024 13:54

Popit, just because an orange is bigger does not mean it has more juice in it, Lloyd’s car book is about 2x that of Close, not 10x, and Close are more likely to have higher mix of commission-based deals, due to their route to market being via inter me diary, whereas Lloyds will loan more often directly these are all facts, DYOR properly. It's possible the exposure for Close is more than Lloyds, we don't know for sure as the % is not publicly available, but we do know the routes to market are different, and we know Close don't loan directly so most probable higher mix.

To have 10% in mind, is certainly wrong, they are selling off the family silver that generated cash, and results in any case have been flagging for years, so what's left is an income play over a much small income that might under pin £4-£6, or they might have bigger problem, so where's the upside to invest ?
If they cut more out to FCA for nothing then it comes straight off market cap, the market cap is only 0.6bn, Lloyds is 60x that, so they can get a way with a estimate like 0.4bn, put differently I would estimate relative to market cap Close has 30x more exposure than Lloyds, just to put proportionality of orange into perspective, they may not able to face up to what could even be an existential problem.

You have to imagine the FCA amounts to little or nothing, to imagine upside from here, that is now looking very unlikely, given the delay to the report, court findings so far, scale of the issue and how companies like Close have been behaving since adding a lot of fuel to imagine a very large bill close to the market cap of the stock, so life changing, that is what is coming across and that is why the shares are tanking IMO.

[suetballs] 20/9/2024 13:20

naeclue
Hope you’ve got a big desk - because I’m there with you.
Suet

[naeclue] 20/9/2024 12:46

"You can argue about the liabilities all day but the red flag is they sold the asset management business which was compounding along nicely."

In the results statement they indicate that the CBAM business required increased investment in what was becoming an increasingly competitive market.

If they left it, and it became even more of a distressed sale, the price would have got worse.

I don't know. Looking at the results, profits increased on previous years, even if you subtract out the CBAM contribution. Novitas issues are continuing to tail off.

Clearly it hasn't gone over at all well, but the story hasn't changed for me - there is a good business that can weather the FCA actions on motor finance. I'm hiding under the desk, and holding on for now.

[dgarvey] 20/9/2024 12:23

Begs the question - are they withholding information from shareholders and the market to try and shore up the SP?Doesn't take long to add up the suspect loan numbers and estimate the potential impact.

[blueclyde] 20/9/2024 11:41

You can argue about the liabilities all day but the red flag is they sold the asset management business which was compounding along nicely. I do not see why the should have done this until anything if anything was known. Now you are left a bank that seems to operate at the rougher edges of finance in stuff like car finance and other obscure stuff that seems like the next bin fire. Why bother when you can buy Barclays on a PE of 5 and get over 10 percent yield on dividend and buy backs?

[chriss911911] 20/9/2024 10:11

Well, you need something to invest in, and that update did the reverse, could well test lows again, as until there is a better update, anyone's guess where this is going now. The CEO going off ill, maybe for genuine reasons, but what was already high risk for me just adds more risk to the already very poor update, so could be an ugly period now and a long wait to get anything to reconsider investing.

[stoopid] 20/9/2024 09:43

Share price has crashed from 560 to 460 in approx 18% in two days, slightly overdone methinks.I do think that selling CBAM and winterflood was a bad idea at such a poor valuation and also begs the question, was it a panic sale to raise the capital necessary along with divi suspension to cover losses they may be already aware of regarding the FCA investigation

[suetballs] 20/9/2024 09:32

The gloomy results release could have been penned by Rachael Reeves!
It has significantly crashed confidence and no doubt will cause reputational damage with regards to future business.
Any white knights out there?
Suet - rants over

[flyfisher] 20/9/2024 07:23

Several months ago RBC commented that a sale of asset management would raise about £330m.

[dplewis1] 20/9/2024 07:18

RBC cuts price target to 540p from 620p

[suetballs] 20/9/2024 04:48

Lloyds have provided £450m.
Suet

[popit] 20/9/2024 02:08

Lloyds were about 10x the size of CBG in the motor market and Lloyds only made a provision of £250 million

So a provision of about £25 million would probably have been appropriate for CBG

They were also not required to show any provision according to the reporting rules and so that is probably why they have not shown any provision

CBG shares look extremely undervalued now at a Price/Book of only 0.5

[cirlbunting1] 19/9/2024 20:12

To sure up market sentiment... CBG would either include a provision (i.e., like lloyds) or debunk it. For CBG not to do either makes you wonder how much are they actually liable. They've done the research internally without a doubt.. which begs the question.. is it an excess of 300m?

[naeclue] 19/9/2024 18:36

The court case being brought by Barclays could upend the FCA enquiry, but I think we are still waiting to hear if that will be heard.

The DCA offered by Close Brothers from 2016 to 2021 only allowed the dealer to reduce interest rates. I was hoping the FCA would have provided guidance to the effect that this arrangement would not provide compensation payments to customers. No such luck.
But that may well end up being the case.

It's a while to wait, unless Barclays win, in which case Christmas comes early.

[popit] 19/9/2024 17:55

Very strange to see the shares up 5% and then down 10%

The RBC estimate of £350 million seems hugely excessive when compared to the average estimate of about £150 million or £200 million and the low estimates of about £50 million or even zero

Good results and now trading at only 50% of £10 asset value

Would not be surprised to see these back at over £8 next year

[popit] 19/9/2024 17:34

“In our view, Close Brothers’ shares remain beaten up and, therefore, whether you are looking at historical or sector-relative valuations, they screen as cheap,” Benjamin Toms, an analyst at RBC Capital Markets, said in a note.

“The bad news around the FCA’s review of motor finance is now well embedded into consensus and net interest margin and loan growth assumptions are sensible.”

[suetballs] 19/9/2024 16:25

cbg have shown their hand - we are bolstering our Balance Sheet by £400m in response to the FCA review.
So just take it - no problem!
Suet

[riverman77] 19/9/2024 15:22

Impossible to say if it's cheap without knowing the size of any potential fine. RBC estimate £350m but no idea if that's the right ballpark. My sense is that the fine probably won't be that bad, but not sure I'd want to base an investment decision on that basis.

[dgarvey] 19/9/2024 14:00

Good summary on CityAM - even with the potential FCA burden, they still seem cheap.https://www.cityam.com/close-brothers-to-sell-asset-management-arm-to-oaktree/

[riverman77] 19/9/2024 13:06

Agree with the above, they seem incredibly passive and just prepared to go along with whatever the FCA decide, without putting up any sort of fight. Avoiding for now.