(Alliance News) - Fiinu PLC on Wednesday said its subsidiary Fiinu 2 Ltd has had its restricted UK banking licence withdrawn, while it cannot reapply due to the "continuing challenging market conditions".
Shares in the Weybridge, England-based digital bank plunged 62% in early morning trade on Wednesday to 2.50 pence each in London.
Fiinu, which offers short-term credit to consumers via an arranged overdraft, said it has not yet been able to secure the necessary exit funding to consider seeking re-application.
The company said the best course of action for Fiinu 2, which was formerly known as Fiinu Bank Ltd, is to begin cost reductions at both of its subsidiaries Fiinu 2 and Fiinu Holdings Ltd, including staff redundancies, and renegotiating or ending supplier agreements.
This was "given the ongoing expense of maintaining and enhancing the development of the operationally ready banking technology by group companies", Fiinu said.
It stressed it has enough funds to scale back its current operations at the two subsidiaries, with unaudited cash resources of around GBP4.3 million as of June 30.
Meanwhile, Fiinu said it is unable to utilise its funding options with Dewscope Ltd, GEM Global Yield LLC SCS and GEM Yield Bahamas Ltd.
"Whilst Fiinu 2 Limited proceeds with the controlled scaling back of its operations, which may take a number of months, the company will continue to review all its options in respect of the business, including trying to source the additional funding required for it to re-apply to the regulators to re-start its banking licence application, but also other options, which may include a change of strategy and/or a sale of the group's technology assets," the company said.
Chief Executive Officer Chris Sweeney added: "It is with deep regret that we have had to scale back operations in Fiinu 2 and Fiinu Holdings, following the successful completion of the technology build of the Plugin Overdraft. The current general capital, and market specific conditions, are increasingly challenging for a business at Fiinu's current stage of development.
"I would like to take the opportunity to thank our shareholders for their support and colleagues for the considerable efforts in developing the technology and the infrastructure to be in a position to launch the product into the market. I would also like to thank the [UK Prudential Regulation Authority] and [UK Financial Conduct Authority] for their continued support during these challenging times."
Fiinu said it will make further announcements on progress and other developments "as and when appropriate".
By Greg Rosenvinge, Alliance News reporter
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