Embattled cash loans provider Cash Converters (ASX:CCV) has announced today that Westpac will cease to provide financial services to Cash Converters.
The company said in a statement to the ASX that “Westpac has taken the decision to cease to provide banking and financial products and services t its customers who provide Short term Credit Contracts (STCCs) or Small Amount Credit Contracts (SACCs). Cash Converters is a licenced provider of financial services under the terms of this Act.”
CCV requested a trading halt earlier today in order to prepare the release of the announcement. CCV fell more than 10% following the lift of the trading halt and is currently trading at 52.5c, after falling as low as 45.5c.
However the company is trying to calm investors down and assures that it expects to replace all facilities and services in the “ordinary course of business, including the securitisation facility for personal loans.” Most services are expected to continue during the next six months.
Cash Converters is facing difficult times as the share price has halved in the past year and it is currently trading at the lowest level in three years.
Last month Cash Converters also confirmed that it is facing yet another class action claim as borrowers from Queensland seek compensation for brokerage fees being charged between 2009 and 2013. Year to date the stock has declined 50% and upside catalysts are limited at present.
It appears that in these turbulent times investors seek to reduce exposure and put their money elsewhere. Wise-owl has been bearish on this sector for a while and has therefore recommend to sell competitor Money3 Corporation (ASX:MNY) on 30th March 2015. The stock has fallen 40% ever since.