I think the below highlighted part in yellow indicates why it was easier to just clean break

EML Payments shares plunge on CEO Tom Cregan’s exit; Emma Shand to take on top job

Emma Shand, EML Payments CEO and managing director.

• CLIONA O'DOWD

  JOURNALIST

  @ClionaODowd

  

  JOYCE MOULLAKIS

  SENIOR BANKING REPORTER

  
• 49 MINUTES AGO JULY 11, 2022
• NO COMMENTS

EML Payments’ new chief executive Emma Shand will review all aspects of the company and is preparing to relocate to Europe as she takes the top job one day after ex-CEO Tom Cregan abruptly resigned.

Mr Cregan’s shock departure sent EML’s share price into a tailspin on Monday, with the stock falling more than 24.6 per cent to close at only 96c.

Speaking to The Australian, Ms Shand said she was keeping an open mind on the European operations, and saw Irish regulatory challenges of the past 14 months as an opportunity “to have a look at the scope of the business”. “I feel very confident that we have good prospects ahead for growth,” she said.

REA

“We just need to be really focused on how best we can organise ourselves and our products and our offerings to the market to be set up for not only our success, but … for the benefit of our shareholders and our wider stakeholder community. I’ll be taking a review of all aspects of the business. And our key stakeholders and investors can expect more information from us, probably following the year-end, because we do want to take a considered approach about this.

“I want to really leverage the strengths of what is a strong executive leadership team and for us all to be looking at where our strategic priorities are and how we execute moving forward.”

Ms Shand is preparing to move to Europe and is likely to be based in Ireland or Britain. She takes the helm after a difficult 14 months for the payments operator. Its woes centre on its troubled European operations – primarily its Irish subsidiary Prepaid Financial Services, which it acquired in 2020.

In May 2021, the Brisbane-based fintech informed the market that regulators were probing the Irish subsidiary over anti-money laundering and counter-terrorism financing concerns.

Months later, the share price fell further after the company warned that its Irish business would take a further hit as a result of action from the Central Bank of Ireland.

A multimillion-dollar remediation program was set up following talks between EML and the regulator. The Irish central bank also ordered EML to restrict the growth of the Irish division until the remediation program was complete, expected later this year.

Former EML chief executive Tom Cregan. Picture: Annette Dew

In February the company pledged to defend a class action concerning disclosure of its Irish problems after Shine Lawyers launched a Supreme Court of Victoria action seeking compensation for shareholders who suffered losses after buying EML’s shares between late 2020 and mid-May 2021.

The shares are down 70 per cent in the year to date and are 80 per cent lower than the $5-plus the stock was trading at in May 2021 before its European woes were made public.

The abrupt CEO changeover comes as EML investors put pressure on the board to undertake a share buyback or revise its dividend policy, amid a sharp decline in the payments sector.

Mr Cregan, who led the company for a decade, had informed the board he was considering stepping down about six months ago, prompting a succession process to commence. He formally resigned on Sunday. Ms Shand beat two internal candidates for the top job – finance boss Rob Shore and operations chief David Curneen.

Sources said that with capital management deliberations and consideration of various acquisitions occurring at the EML board level, it was considered better for Mr Cregan to depart quickly, rather than recusing himself from a host of discussions.

But the absence of a smooth transition period and handover is unnerving EML investors and analysts who cover the stock.

RBC Capital Markets analysts said it was an “unexpected negative surprise” and highlighted that no reasons were given for Mr Cregan’s departure.

But EML chairman Peter Martin said Ms Shand had “an ideal set of attributes to lead the company into the future”. “Emma will provide highly professional leadership through a period of very rapid change,” he said.

Ms Shand, who has served on EML’s board since September, said that for the foreseeable future she would devote most of her time to Europe, but that she was also focused on the US and Australian operations and customers.

“The opportunity for EML Payments in Europe and beyond is absolutely massive. There’s a revolution going on in payments at the moment and it’s very fast-paced. It’s all about financial and social inclusion, and delivering really excellent customer experiences when it comes to payments.

“We want to make sure we’re really set up for success over the next five to 10 years. We’re very excited about open banking and what that brings to our … customers. We’re very keen to explore possibilities more than we have done today in … open banking, because that is the future.”

Acknowledging Mr Cregan’s time as CEO, Mr Martin said the company owed him “a real vote of thanks”. The company on Monday confirmed Mr Cregan would receive his contractual entitlements, with no termination benefits provided. Ms Shand’s employment terms would be announced in due course, EML said.

CLIONA O'DOWD

JOURNALIST

Cliona O’Dowd joined The Australian in 2016 and writes on financial services. She was previously the editor of business news and commentary website Business Spectator. Before moving into journalism she spent a ... Read more

JOYCE MOULLAKIS

SENIOR BANKING REPORTER

Joyce Moullakis is a senior banking reporter. Prior to joining The Australian, she worked as a senior banking and deals reporter at The Australian Financial Review.