End game for the Provvy
The battle for control of sub-prime lender Provident is being speeded up. John van Kuffeler and his team at smaller rival Non-Standard Finance are asking investors to make up their minds by May 15.
Weeks have passed since NSF claimed victory in the battle of the bottom feeders, having secured acceptances from just over 50pc of Provident shareholders. But investors often leave it to the last to cast their votes. The effort by NSF to chivvy things along does not scream over-confidence.
By moving the deadline, van Kuffeler and his team are asking investors to take it on trust that an activist Competition and Markets Authority will not seek remedies which could undermine value.
It will also mean that they will have to make up their minds before NSF receives approval over steps it proposes to take to heal breaches of the Companies Act.
NSF is justified in pointing out the regulatory lapses of Provident, and to its credit has toned down the harsh personal rhetoric. It should also acknowledge that Provident, under the leadership of City veteran Malcolm Le May, has moved a long way to correct the problems and co-operated with the regulator, the Financial Conduct Authority. Indeed, the FCA has made it clear that it has concerns about whether van Kuffeler’s pledges on delivering value for shareholders squares with caring for some of the most vulnerable sections of society.
The management future of the most important division of both groups – Provvy’s Vanquis bank – is still uncertain. It has acquired an experienced chairman in Niall Booker, but the FCA will want to know who is actually going to run the bank.
Van Kuffeler says that he and his team will bring 68 years of experience to the combined group. But in so doing they will drive a coach and horses through the best governance standards. The NSF team are part of a cosy coterie, out of touch with the technology now driving the financial sector and short of independent scrutiny of decisions.
Supporting a merger, which would create a sub-prime lending monolith that could control more than 50pc of the market, would batter consumer choice.
It would potentially give NSF management pricing power which can only be detrimental.
Minority investors have a moral duty to tell van Kuffeler and his Dad’s Army to take a hike.
Audit gesture
The damage done to auditors by a series of foul-ups ranging from the Co-op Bank to Carillion and Patisserie Valerie has been devastating. Finally, at least one of the big four firms has woken up and smelled the coffee.
In the distant past it was not uncommon for auditors to ‘qualify’ the accounts of clients when they believed mischief was afoot.
Indeed, as a young financial journalist one of my jobs was to scrutinise reports and accounts to spot the qualifications.
As audit firms became bigger and grander, the fees became ever larger and consulting income became as significant as audit revenues. There developed a reluctance to embarrass the client. Deloitte deserves credit for first qualifying the accounts of
Fiery friends
Ukraine-based iron ore prospector Ferrexpo over unexplained charitable donations.
It has resigned suddenly, arguing the company was slow to take corrective action. Deloitte requested a probe last year into funds which may have been transferred to a ‘charity’, Blooming Lands. It now says it cannot continue as an auditor after the company initially rejected a formal review.
The auditor also found itself embroiled in a debate with Ferrexpo’s billionaire chief executive Kostyantin Zhevago over alleged personal connections to the charity.
Deloitte’s departure also triggered resignations from the independent audit committee chairman Mary Reilly and Bert Nacken, head of the pay committee.
Chairman Steve Lucas needs to act fast if credibility is to be restored. AMID all the recent hype around grocery distributor Ocado, which has lifted its market value to £9.6bn, there has been a lingering question over reliability of its systems following a fire at its Andover centre.
A probe found the culprit was a plastic lid on a grocery-carrying robot which caught fire because of an electrical fault on a ‘first generation’ battery unit.
The plastic lids have been removed, new sensors are being installed and the robots can get on with their work again. Phew.