LONDON (ShareCast) - (ShareCast News) - Shares in International Personal Finance tanked on Friday after the company said it could be hurt by new legislation in Slovakia.
On Wednesday, the Slovak parliament voted to adopt previously undiscussed proposals to amend various pieces of consumer legislation, including changes to the Civil Code prohibiting contracts for ancillary services that relate to the customer's fulfilment of an underlying agreement.

IPF said it was reviewing the draft amendments to assess the extent to which its product structure would be affected by the proposed changes.

The draft proposal will now go to the Prime Minister for formal signature and then to the President for approval.

"Based on our current understanding, these changes would mean that all fees that IPF raises in connection with the issuance of a loan, including the fee for home service, would need to be levied at rates consistent with the remuneration cap," the company said.

"Consequently, and if the legislation is to become effective in its present form, IPF's current view is that it would have a material adverse financial impact on its Slovak business and the company is very actively reviewing the implications of these unexpected amendments."

In the 12 month period to the end of June, IPF's Slovak business generated revenues of around £43M and pre-tax profit of around £6M.

Numis said: "Slovakia announced a very different and materially worse interest rate cap than Poland and it looks to us that this market will now be uneconomic. It appears to us that it will (assuming the regulation is passed) be impossible for a significant proportion of the population to be able to get any form credit at all."

"The bears will argue that IPF is being regulated out of existence, but we suspect this is not the case and eventually Slovakia and Poland will repeal their regulation as illegal lending (with all its associated consequences) expands to fill the space left by legitimate providers of credit."

At 0920 GMT, IPF shares were down 25% to 242p.

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