Member Info for LIBERTY2

Initial FCA response to the Lords Financial Services Committee enquiries published today:

https://committees.parliament.uk/publications/49336/documents/262633/default/

Interesting volume this afternoon. Around 350,000 shares in large bulky orders came through with buy side pressure between 3.30pm and 4.30pm. Yet very limited movement on the SP.

I am wondering if the MM's absorbed a fair bit of volume on the 26th August with the high volume 5m day. It could partially account for the steady step down from £5 to this level as they hedge / release the inventory over the past few days. Who knows.

Although, it may not be this specific FCA appearence.

The 'Committee' in question is listed as the Treasury on the Parliament schedule link.

The Committee involving the specific Lords challenge to the redress scheme was from the Financial Services Regulation Committee.

Yes that is most likely the FCA appearence where they will be responding to the Lords challenges (link below) on legality and feasibility of their suggestions in the FCA letter dated 4th of August. Perhaps Nikhil's P45 will be in the room.

https://committees.parliament.uk/publications/49089/documents/258842/default/

On the topic of manfors emotionally charged continued comments regarding Knots passive 'prediction' of SP.

I would be cautious about slinging mud on this when only a brief flick through manfors recent post history, highlights you have proven to be a truly disastrous analyst when it comes to predictions. I truly hope nobody listened to you and lost money when you predicted the offer price from Sidara for Wood Group would be £1.40 on the 2nd of April (for non-followers of this debacle, the offer price is now 30p, and the share is suspended at a magnificent 18p). You then followed up with further reinforcement of your analytical expertise:

''Sidara are not allowed to bid as low as 45p for WG as they have already paid nearly 50p for WG shares

Sidara will probably bid at somewhere between £1 and £1.40 and it will most likely be accepted by WG ''

So that would a bid today at 78% below your estimate.

Dear oh dear - whats that they say about glass houses...

Hows about we refer back to intelligent conversation on CBG, rather than emotionally charged nonsense.

All the best.

On the matter of this months tone and rhetoric from management; I imagine it will be in-line with the well rehearsed subdued position which has been present since the FCA got involved.

They will be lowering short term guidance in line with the business disposals, but also boasting a very strong capital position in light of the SC decision. Stating that cost savings initiatives are proving successful and may have over-delivered (£25m+). They will be reinstating their SC victory. And they are ‘looking forward to engaging with the FCA on the consultation’.

Close have consistently been an under promise, over deliver organisation. They will likely set the bar lower with the lowered guidance and comfortably move to beat targets over the next 12-24 months - always the better option for SP performance.

How will the market react to this short term? Don't know, doesn't particularly matter for me.

Will they reinstate dividend or launch a buyback this month - frankly I am doubtful. I just do not see it aligning to the subdued position they have intentionally played - regardless of their SC victory and sufficient capital. After all, the scope of any potential redress is still not known for fact and as a conservative regulated bank they will act accordingly.

Dividends / buybacks need to be PRA approved. In the midst of this they may give resistance to the likes of CBG for doing so, potentially not for a small token one if managements decides to play that card. Also feel the optics of it are pretty bad on a PR / journalistic view point whilst this matter is still very much in the press, which they may be conscious of.

Management have safe guarded the business throughout this. Their primary concern is not the share price, their sole focus is ensuring a profitable, well capitalised bank continues to provide service for the next 150 years - so i’m not expecting any maverick moves at this point. The SP will look after itself longer term.

All the best.

M007j - for conversation sake, none of those for me.

An entrepreneur from the age of 16, with a keen sense for logical outcomes, fundamentals and an enjoyment for deep diving research / analysis. I have significant interests in the automotive world with two of my businesses, and have had personal dealings with CBG for 15 years. Became a part owner of CBG in November following the SP collapse. It was an easy buy for me and a rare divergence from my index fund holdings. I appreciate I have a much clearer understanding of the business than most because of my history with them but it really did clearly portray itself to me that the CoA got it wrong and the business would eventually prosper again regardless. Perfectly fitted my long term hold ethos with investing.

Now in my early 30’s im fortunate to say that I am in a position of what I consider semi-retirement, keeping my hand in when required. I’m a firm believer in passive income / work life balance and have heavily pursued that over the past 17 years - CBG in November looked like one of the best passive capital appreciating prospects I've been fortunate to acquire to date and now forms a significant part of that side of my interests.

All the best.

‘Bank shares could fall 50% from current levels’

One would hope, although admittedly I have doubts based on some of the comments i’ve spectated over the past few months, that all those who utilise these forums and invest their hard earned understand that stock prices have the ability to move up, and down, based on an infinite number of catalysts.

If the primary concern is a country wide or currency based downturn then you want to look for a currently undervalued asset in an attempt to limit downside risk. You have found that in the likes of CBG, when compared to some of the other UK banking sector currently trading at far higher valuation metrics.

CBG is well placed to deliver growth on its current valuations. Current p/e’s are skewed by large one-off provisions (which are looking more conservative by the day) and selective loan book slow down in the light of the now corrected earlier CoA ruling, significant cost savings initiatives filtering through and compounding year on year, operational expenses reducing once this debacle has passed and those associated with the low ROE segments of the business which have been sold, benefit from the more agile and reactive smaller group (previously at 4,000 staff prior to CBAM / Winterflood disposal, now at around 2,700 once WF completed). These disposals equate to a significant net profit gain by 2027 based on analyst operational savings figures. This is to name just a few which currently come to mind sitting by the pool.

There will ALWAYS be potential reasons a share price or the entirety of a market could devalue temporarily, and also increase in value. Thats why the stock market works - some sell whilst others buy. If you are a firm believer its going to happen - you sell up. Unless you operate under names such as ‘manfor’ or ‘chid’ to name a couple, where you choose to defy your own beliefs and convictions by holding the same stock you are bearish on (manfor early August ‘I own a lot of CBG’ - yea, right). Careful who you listen to.

Give the daily obsessing over movements a break - check once a week if you are a LTH and can’t stomach the emotions of the rollercoaster ride. Life goes on, and stock price go up and down.

All the best.

Not forgetting the Clydesdale v FOS re-take with the newly corrected and narrowed DCA goalposts on the 16th.

I had an interesting chat with a board member of a small UK bank this week at a social event abroad - the conversations their organisation has had with their Treasury links on the future of Nikhil as head of the FCA, and also the FOS in its entirety was amusing - goes to confirm the thoughts with their ‘card being marked’.

Also, I was due to be a guest at an event at the House of Lords on 10th September. Received an email last night from the organisers that there has been a last minute change of venue due to HoL having some urgent business to schedule. Possibly the day of FCA appearing being shoe horned in - who knows.

CBG results have now been confirmed for 23rd of Sept.

I would trust some positive catalysts are coming over the next few weeks.

Back to the sunshine - enjoy your weekend folks.

‘’ Sorry for the negativity but it gets tiresome watching profits disappear on a daily basis.’’

Respectfully, this concise sentence is the reason that private investors are not particularly efficient at it. PI’s more often than not trade at exactly the time they shouldn’t be, because of emotions like the frustration in your post.

If you believe in the fundamentals of the business, believe its prospects are better than when you invested, and believe that the SP will at some point be higher than it is today, probably considerably so, then the simple solution is to stop watching it - what are you planning on doing to it short term that warrants watching a price flick around daily whether it be up like a couple of weeks ago, or down like this one.

None of us, nor the incredibly wealthy funds, can consistently predict short term movements - as has been proven here with shorts, or the absence of huge buy ins at £2 from II’s.

What is far easier to attempt to predict is that something WILL happen, not WHEN. That will for me is the SP will be greater, than it is today. When? Sometime in the future. Until then its all just noise and life goes on.

All the best.

The suggestion is founded on QE linked interest paid by the BoE.

This specific account type will likely account for less than 10% of the funds CBG accounts for as ‘held at central banks’, based on typical reserves required for liquidity / BACS / CHAPS etc operations.

It would leave CBG able to simply reinvest the relatively modest funds which would attract a ‘QE windfall tax’ into a different rate paying mechanism.

The big banks are far more exposed to this proposal due to their very large QE linked balances and less agile in terms of moving the funds, hence the market today.

Again, its a zoom-out moment.

We were having these same conversations at £2.xx, then £3.xx, now £4.xx - time is your greatest ally in the market. I know humans don’t do too well with delayed gratification, but just let time do its work, and cut the management some slack, they’ve done a sterling job since I've been a holder, appears they are making the right moves for the medium/longer term too.

Currently in the sunshine of Santorini - hopefully equally as nice back in Blighty.

All the best folks.

Unusually high volume in the auction, 2% below last trade, but aligned to the lower end of the days trading.

Somebody offering volume, somebody else buying it. The fact that 4+ million shares could execute within the days range shows support on both sides.

Could be index funds rebalancing after CBG climb of the 250, could be one significant holder reducing and another adding. Who knows - no big deal in the scheme of things.

Apologies - some of that was cut off, not so concise.

In human summary - as has been discussed extensively, the FCA must act within the scope of the law. It will simply not fly if they attempt to do differently, we have an early snippet of the push-back from the Lords already, just wait for the avalanche if they push this in an illegal direction during the consultation.

So as it stands today they are limited to DCA (pending Barclays 'Clydesdale') and non-DCA which had a list of niche elements such as in Johnson (very hard to try and push a sweeping redress scheme for, will apply to a very, very small number of contracts).

As has been correctly noted - they cannot 'logicially' (assuming the FCA has any logic, i'm not so sure), proceed on any scheme without waiting for the Clydesdale v FOS verdict. As knot states - this previously announced verdict rested on assumptions made by the CoA in Hopcraft - later found to be spectacularly wrong, who would have thought.

Pressure, time and ultimately the law (its now been set in stone) will resolve this in favour of the banks. This isn't to say there will not be a scheme... this is to say it will be approx what has been provisioned by Close, or less. And there is enticing opportunites for the banks to seek the damages previously alluded to from the CMC's, who have walked directly into the crosshairs of the banks, government, FCA and SRA during this debacle.

Interesting times ahead.

For those concerned or asking the question, here is a concise ChatGPT explanation of the FCA's abilities when attempting to impose a scheme:

Legal and Regulatory Framework: FCA's Constraints

1. Statutory Authority Under FSMA Section 404

The FCA’s power to impose an industry-wide redress scheme derives from section 404 of the Financial Services and Markets Act (FSMA).

Under this provision, the FCA can act only if:

It appears there have been widespread or regular failures by firms to comply with requirements;

As a result, consumers have suffered or may suffer loss or damage for which a remedy would be available in court; and

It is desirable to secure redress via FCA rules rather than other routes.

FCA Handbook

Macfarlanes

Importantly, the “requirements” may include both FCA rules and general law (e.g., the Consumer Credit Act or negligence doctrines) that courts enforce.

FCA Handbook

The FCA cannot impose obligations retroactively or beyond legal remedies known under law at the relevant time.

FCA Handbook

2. Supreme Court Judgment Is Binding Law

In the motor finance (“Johnson”) case, the Supreme Court ruled that dealer-brokers do not owe their customers fiduciary duties, but that failure to properly disclose commission arrangements—especially discretionary ones—can render the relationship unfair under the Consumer Credit Act.

Cadwalader

Law Gazette

The Guardian

That ruling provides clarity on what is and isn’t unlawful—so any redress scheme must reflect these legal boundaries.

3. FCA Must Align Its Scheme with the Supreme Court Judgment

Following the judgment, the FCA announced it would consult on an industry-wide redress scheme, analyzing the judgment and anchoring its approach in legal precedent.

FCA

Cadwalader

The FCA's proposed scheme will focus on:

Discretionary Commission Arrangements (DCAs) that lacked proper disclosure.

Selected non‑DCAs where non‑disclosure made the agreement unfair, in line with the Supreme Court's decision in Johnson.

FCA

+1

Cadwalader

The FCA is also obliged to:

Consult publicly before imposing the scheme.

Conduct a cost‑benefit analysis.

Ensure that any rules are legally grounded, including seeking legal opinions (e.g., from Queen’s Counsel).

FCA Handbook

4. Conclusion: FCA Must Act Within the Law

No, the FCA cannot impose a redress scheme ignoring legal limits or Supreme Court rulings. It must follow:

Its statutory FSMA framework for redress schemes;

The legal findings of the Supreme Court regarding what constitutes unfairness in motor finance;

And it must do so through proper consultation, analysis, and legal justification.

Can the FCA Impose a Scheme Outside the Law?

Impose scheme ignoring law? No, Must follow FSMA and Supreme Court.

Cover practices deemed fair by courts? No, Only actions that courts would say are failures.

Use procedure without consultation? No, Must consult a

Nothings as boring as listening to the whining from the sidelines of an ‘out of the money’ pundit.

If only you were here 8 months ago like the rest of us, you too might have a 100%+ profit to show for your expertise in analysing EPS. Boy does your sourness echo through the board.

Enjoy your day folks.

Theres lots of different valuation metrics that can be applied here - the point is that by all accounts it is still currently undervalued. The reason I stick with the price / book value is that in my view this is perhaps the most applicable valuation when it comes to a prospective buyer trying to obtain CBG. They have to pay for the tangible asset, its as simple as that (equates to around £10 per share). Anything else on top of that in terms of goodwill, earnings metrics etc is premium.

Short term the buyout scenario is what I consider the biggest peg of value, its a real possibility that somebody will approach in the next 12m. Into the medium term, if there is no buyout, the earnings / dividend etc etc metrics become more applicable.

Its a good place to be right now - I am happy sitting on this one for the long term as has always been the plan.

Freedom - CBG has a net asset value of £1.8bn. Total figure once all debts / provisioned liabilites are paid.

Perhaps I take a more simplistic view on valuations. For me, paying 50p for every £1 of asset is a good deal, I built my position here at around 25p / £1 book. This is before you even start looking at earning multiples, which for a consistently profitable company like CBG can only add a premium to price / book valuation.

This one is just about some time. Let the market re-rate slowly and surely, allow management to sharpen the business, allow the FCA to blunder their way to a conclusion. Take a 3+ year view. Once the fog has cleared, time will do the hard work for you.

What on earth are you on about. Hes having a laugh at the resident man / woman of many faces Chid. Frank Abagnale - fraudster, impersonator, confidence trickster, possess many guises, good at worming their way around into a position of acceptance...

Some people need to sell up and move on if this is what gets your heart racing, your not cut out for this.