The dreaded 'Bank of Ireland Update' has become an ominous ASX announcement headline for EML Payments (ASX: EML) investors since regulatory concerns were raised about the company's European subsidiary PCSIL in May, but today the Brisbane-based group had mostly good news to tell.
Last month EML announced the Central Bank of Ireland (CBI) was looking to limit PFS Card Services' (Ireland) pre-paid card programs, while at its AGM this month CEO Tom Cregan noted $11.5 million had been set aside for remediation, advisory services and potential fines.
It is a state of affairs that has weighed heavily on the EML share price, however this morning it rose by more than 21 per cent after the gift and reloadable card company announced encouraging correspondence from the CBI - a regulator whose stance affects a European business that brings in 30 per cent of consolidated group revenue.
"The CBI will permit PCSIL to sign new customers and launch new programs whilst staying within the material growth restrictions," the company said.
"PCSIL is confident that it can meet these obligations."
The Irish regulator also revealed it would not impose broad-based reductions in limit controls on programs, as it was satisfied to continue to engage with PCSIL with a view to agreeing appropriate limits under its Risk Management and Controls Framework.
The CBI however does intend to impose a material growth limitation over PCSIL’s total payment volumes for 12 months, although this could be rescinded earlier following third-party verification to confirm PCSIL’s remediation plan has been effectively implemented.
"The CBI has invited PCSIL to provide it with submissions in relation to growth limits, which PCSIL intends to do by 30 November 2021," EML said.
"As advised at the 2021 Annual General Meeting, PCSIL has been removing higher volume lower yielding programs to enable it to comply with a material growth restriction and is confident it can meet these obligations.
"The remediation plan is on track. PCSIL is committed to meeting the timelines as established by the PCSIL Board and the EML Board."
As mentioned in previous updates, these correspondences do not relate to EML's Australian or North American business, and nor do they affect PFS' UK subsidiary or EML's other European businesses Sentenial Limited and Nuapay.
"EML is independently regulated in multiple regions and subject to regular audits by various parties including Central banks, payment schemes, external and internal auditors and other third parties," the group said.
"EML takes regulatory compliance, including AML/CTF, risk management and governance very seriously, and is committed to ensuring our global operations meet the highest standards of risk and regulatory compliance."
At the time of writing EML shares are up 21.82 per cent at $3.35 each, but this is still 9.5 per cent shy of their level prior to the last CBI update and 35 per cent lower than their $5.20 per share closing price before the regulation saga began.
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