EML Payments shares drop as Irish regulator confirms more remediation work required

EML Payments shares drop as Irish regulator confirms more remediation work required

Liffey River, Dublin (Courtesy of Thomas Vogel on Unsplash).

Shares in EML Payments (ASX: EML) have been hit yet again after the Central Bank of Ireland (CBI) announced more work is required to allay significant regulatory concerns regarding the global payment solutions firm's Irish subsidiary.  

PFS Card Services (Ireland) Limited (PCSIL) has been undertaking remediation work at the behest of the Central Bank of Ireland (CBI) since May 2021, after the Irish regulator raised issues with the governance, resourcing, reporting, risk methodologies, controls and risk frameworks, capital adequacy, safeguarding and transaction monitoring of the business.

Brisbane-based EML Payments incurred a one-time expense of $11.4 million in FY21 related to advisory fees and remediation expenses - which were initially due to be completed by the end of March 2022. Of this total amount, $9.3 million was allocated to future legal and advisory expenses and any potential enforcement action by the CBI.

The latest update confirms that although PCSIL has undertaken and completed significant work, CBI has identified shortcomings in components of the remediation programme, principally the sequencing and approach taken to the risk assessment of its distributors, corporates and customers.

PCSIL has confirmed it will adopt a revised approach to these components with the completion of the remediation work now set to be finalised in 2023.

The business has already commenced preparation for this work in anticipation of the findings, which may result in additional controls being embedded into the internal framework.

PCSIL has been operating under a material growth limitation over its total payment volumes since late 2021, which is set to expire in early December 2022. However, whether the CBI will impose further regulatory direction or limitation on the subsidiary remains unknown following the latest update.

EML Payments appointed Emma Shand to replace outgoing CEO Tom Cregan earlier this month, with the former executive offering no explanation for his sudden departure.

Shand and the EML Payments board have today confirmed they continue to actively engage with the CBI on the matter.

“We welcome the European Central Bank’s decision on 21 July to raise the cash rate by 50 basis points which is expected to immediately benefit our European business by approximately $4 million on an annualised basis,” a statement from EML Payments confirmed.

“EML expects a favourable interest rate environment to partially offset the elevated cost base in Europe due to the remediation programme. EML is wholly committed to full compliance with its regulatory obligations.

“We are confident that a best-in-class internal control environment provides enhanced customer and stakeholder value and positions EML well for scalable and sustainable growth in Europe and beyond.”

The Brisbane-based EML has faced a host of challenges over the past 15 months that have seen the company’s share price freefall from a peak of $5.75 in April last year.

Shares in EML Payments (ASX: EML) have dropped by another 20.08 per cent as of 11.15 AEST following the announcement to $0.95.

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

What to do (and what to avoid) in a bear market
Partner Content
For investors worldwide, emotions are running high as the current bear market overstays...
Etoro
Advertisement

Related Stories

Booktopia acquires upgraded distribution centre as it closes in on $14m investment package

Booktopia acquires upgraded distribution centre as it closes in on $14m investment package

Online book retailer Booktopia (ASX: BKG) is aiming for some relief...

Floods and volatile markets hit Suncorp, drive profit 34pc lower to $673m

Floods and volatile markets hit Suncorp, drive profit 34pc lower to $673m

Volatile investment markets and an increase in natural disasters ha...

Adelaide’s OZ Minerals rejects $8.3bn takeover offer from BHP

Adelaide’s OZ Minerals rejects $8.3bn takeover offer from BHP

An $8.3 billion takeover offer from mining giant BHP Group (ASX: BH...

New CEO Raote puts a shine on Polynovo, the ‘diamond in the rough’

New CEO Raote puts a shine on Polynovo, the ‘diamond in the rough’

A new CEO with extensive experience in the pharmaceutical industry ...