Cattles cutting 1000 staff in loans brake

Subprime and doorstep lender Cattles is to axe 1000 staff as it warned today that profits will suffer as it reins in lending.

The group, which lends to clients who cannot get credit elsewhere, intends to cut the amount of new business it writes by around 75% in 2009 as it tries to conserve cash.

Cattles said it expects the reduction in business volumes to take a chunk out of profits this year, although 2008 earnings are still forecast to be in line with expectations.

The job cuts, of a fifth of its workforce, are part of a major cost-cutting programme. It has been hit by a funding shortage as it struggles to refinance a £500 million facility with its banking syndicate.

The lender also remains in talks with the Financial Services Authority over a bank licence which would allow it to take retail deposits and reduce its reliance on the wholesale markets for funding.

Its shares have rallied in recent days on hopes that it will get its banking licence approved, but today retreated 21/4p to 271/4p.