As previously highlighted, Westpac has been reviewing its policy of banking the payday lending sector
Westpac is the only “big four” bank to lend to the payday lending sector - including to Cash Converters (CCV). Yesterday the bank confirmed that it would withdraw from the sector.
CCV is now in a trading halt advising that to date the company has not received any formal advice from Westpac regarding their facilities. We note however listed peer Money3 has received notice from the bank that it would not renew their facility.
CCV currently has a securitisation/warehousing facility with Westpac, drawn to $56.9m (at 30 Dec 14) with a $70m limit. The facility has a scheduled availability period to March 2016 and termination date of March 2017.
Westpac will need to honour its contractual obligations meaning the facility ceases to be available for new drawings in March 2016, with a rundown period for another year. This appears more than adequate time to find another financier.
More comment to follow once CCV makes an announcement.
For more information on the company's current situation see "Class action launched against Cash Converters" in related articles below.
Director - Credit Research, Industrials and Corporates. Will has over 15 years’ experience in credit and fixed income markets, including 6 in London, working at fund managers, banks and government treasury.