London Scottish joins the queue of zero lending

Credit crunch and uncontrolled loan sanction has put the banks in the UK in a critical situation. London Scottish Bank has planned to nullify any further lending.

London March 05, 2008: London Scottish Bank is going to reduce its lending to zero and look to sell assets after the amount of NPA increased drastically. Losses from loans made to lower-income consumers, made the business model unsustainable for London Scottish Bank in a credit crunch devastated economy. The bank has undergone a negotiation with the Financial Services Authority (FSA) to scale back its lending to solve a 12.7 million pound regulatory capital shortfall.

London Scottish has already significantly cut its lending to consumers after the UK loan market was finding it hard to render unsecured loans. So furious was the effect on London Scottish that, It has decided not to pay a dividend to its share holders. In the last financial year, the company posted a loss of 15.7 million pounds, which included discontinued operations, for the full year ended October 31. It is shocking but true that the bank had earned the same 15.7 million profits in 2006.

Now London Scottish is planning to restructure its business around its debt collection arm, Robinson Way, and is in search of offers for its factoring business and day-to-day working capital for small companies. Other ways of raising money, including issuing shares are also being taken into account. The cost reduction options are at their full force. “It will probably take a number of years for the group to reduce its lending to zero” told the skeptic Chief Executive Robin Ashton, when asked about the cost reduction tools and prospects of stabilization.