Close Brothers Share Discussion Threads

[zb27] 01/11/2024 08:25

Could well see a big big gap up today. 435p price target which accounts for the redress, nearly 100% upside. As usual markets have well overdone this to the downside.

[datait] 01/11/2024 08:23

🚀 🚀 🚀 drop was well overdone

[tomboyb] 01/11/2024 08:17

Lets see what happens -

[zb27] 01/11/2024 08:13

hxxps://www.cityam.com/motor-finance-industry-in-crisis-mode-after-landmark-court-ruling/

"RBC has modelled a worst-case scenario where Close Brothers takes a £387m hit from compensation, interest and administration costs"

[diku] 31/10/2024 22:21

Is Selling getting exhausted?...

[hamhamham1] 31/10/2024 19:54

To see how this is going to pan out, you only have to look at the PPI history.
The gov, regulator and courts, for the good of the common man :), will rinse all lenders.
Watch and see.

[ricardo montalban] 31/10/2024 19:32

It’s academic, this company is toast.

[hamhamham1] 31/10/2024 14:11

If the payout is £1,500 as per article below.
They have £400m war chest, which would cover 266,666 customer payouts.

[karv1] 31/10/2024 12:45

I would love to understand how the analyst get there numbers of 200m then 350m.
My numbers do not even come close to there's, even if you use the lowest numbers in the calculations it still blows there's out of the water by magnitudes on the 200m and the 350m guides.
My math is not my strongest feel free to correct me or tell me where i am going wrong in my calculations.
I liked CBG but it might seem i am being over negative but no one has counter against my numbers or explained how the analyst come to there numbers.
I was using this for guide amounts www.fca.org.uk/publication/consultation/cp19-28.pdf.
3.4
Broker earnings varied significantly across the commission models, particularly for
Increasing DiC, Reducing DiC and Scaled models. Excluding extreme outliers, the
difference between the average and highest commission was around £2,000 for the
DiC and Scaled models, compared to £700 for the flat fee commission model
3.7
On a typical motor finance agreement of £10,000, increasing commission under a
Reducing DiC model typically leads to an increase in interest costs of around £1,100
over a 4-year long agreement. This represents an increase of around 50% in interest
3.8
Next, we used the results of our econometric model to compare the effects of
discretionary commission models on customer interest costs against a baseline of flat
fee models. We estimated that 560,000 customers of the firms in our sample could
pay in total £300m more annually in interest costs

[karv1] 31/10/2024 12:16

I would say using fca earlier similar review they claimed on average person over paid by £500 to 1k on interest so using this as a comparison 1k x 500k of customers from 2007 to 2021 = £250m to 500m+ 8% interest building slowly until 2021 at a guess 150m total and 40m per year from 2021-2024 adding another 60m to120m total = roughly 500m to770m. possible from FCA..
For the analyst to be correct my numbers would have to be 50% to 75% to high to make the analyst 200m guide

Then you have repayments for 800k customers commissions at £250 £500 £750 each =200m 400m 600m+ 8% interest= 150m+ from start date until few days ago and adding either 20m 40m 60m from few days ago per year and onwards. add these together and you have some scary numbers.
.To match the extra 150m from analyst guide my customer base numbers would have to be cut by 50% and at the lower end of £250 commission per claim plus interest.

Motor loan book as grown rapidly over the last 10 years. In the 2015 results they had 300k of customers and on there site I think i read some where they had 80k of new customers last year , my number are estimates from these. I have round up the numbers they are not exact

[blackhorse23] 31/10/2024 11:46

I have explained my last text. Estimated 400m refund then processing cost each claim 750 pounds FCA cost , high court bill , legal cost , historic interest on 400m , their own cost to process etc normally double than original cost . VANQ bank estimate 30m but they have set aside 130m to cover everything

[tomboyb] 31/10/2024 11:20

Blackhorse -

Where is that £800- 1 billion figure from? -

[blackhorse23] 31/10/2024 11:18

Group should set aside money now rather than later!!! They are going Supreme Court which conclude cost , refund amount £400m and other cost including interest, legal, FCA , process cost which could be somewhere £800m to 1 billion loss

[tomboyb] 31/10/2024 10:02

So many other companies simply self imploding -

It IS ridiculous -

[hamhamham1] 31/10/2024 09:44

How do you determine the value of a company market cap or share price if there is an open ended and undetermined cost coming up?
Plus what will the company look like asset (post sell offs), income, profitability wise once the other side and new rules deployed.
Will have a look next year or after resolution been determined.

[hamhamham1] 31/10/2024 08:43

It's a falling knife here now, what the market needs to know is certainty, either way. And the courts process will drag any resolution of this latest debacle out till middle of next year no doubt.

[chriss911911] 31/10/2024 06:42

Regulatory capital is impacted only when you book a loss, as it did with Lloyds, as LLoyd's actually did book the provision 0.4bn to their income statement, so reduced equity, and with it regulatory equity, but their equity is 30bn+, and NAV more or less same so the Lloyds trade 1:1, market cap to NAV (shareholder equity), so no issues there, then again. I would not be investing in Lloyds either anytime soon.

Close did not book a provision, so are in worse position, this a subtle but very important difference, because they know full well if they did it would substantially reduce headroom on tier one, as it would reduce their regulatory equity at least 200 basis points, if you read the annual report, you can work this out, DYOR. Their NAV, is just 1.8bn, v Lloyds 30bn+.

Rights issue, or debt conversion at a discount, or sell more stuff, it’s the only way if the bill is more 0.4bn, and even if they manage at 0.4bn, with equity damaged so much, they could not afford the dividends before. The results recently were not convincing and certainly many years without dividends to rebuild regulatory capital is a given assuming they can preserve margins/business levels/confidence, so you can forget any former levels.

If that was not enough we are not sure what money they can now make on existing business, as the Lloyds provision was for purely FCA to 2020, not wider risks, it’s no surprise the share price keeps falling, and would not surprise me to be in penny share territory come the spring unless there is a dramatic positive development with FCA, but we know, they don’t reach a conclusion until May-25. They over charged and over paid dividends for years, now someone has to pay for that, it isn't going to be me, but would consider when there is an investable picture at £1, or £5, don't care, right now not investable at any price.

[blackhorse23] 30/10/2024 23:54

After set aside the claims money CBG might have shortfall of regulatory capital ! VANQ passed the test and regulatory capital above 550% after set aside money for claims. Let's see what happens in here

[alex1621] 30/10/2024 17:42

I sold out after the Martin Lewis tweet because I knew if he was publicising this there would be an avalanche of claims. I never expected it to get this low. I wonder if the market is overreacting? The danger is that lending on anything will simply be brought to a halt. Whatever happened to Buyer beware? Anyone entering these deals must have been aware that the salesman makes a commission, and would have signed up irrespective.

[tomboyb] 30/10/2024 15:03

UK PLC is destroying itself -

If it was not bad enough as it is -