UPDATE 1-Grenke to abandon franchise model after short-seller attack

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BERLIN, Oct 29 (Reuters) - German leasing business Grenke GLJn.DE> said it would integrate its franchise companies into the group business and add a chief risk officer to its board in the wake of a short-seller attack.

The company’s franchise model has been in focus following a report by Viceroy Research that accused Grenke of fraud.

Grenke, which denies the allegations, said on Thursday it planned to integrate its 16 franchise companies into the consolidated group over the next 12-18 months.

The Baden-Baden-based company will also expand its board of directors to include a chief risk officer. Board member Sebastian Hirsch will become chief financial officer, while chief executive Antje Leminsky will assume responsibility for internal audit.

“Through continuous development, we want to align this successful model even more closely to what the capital market expects from us: transparency, professional governance and compliance,” Leminsky said in a statement.

Grenke posted a 50% fall in third-quarter net profit to 17.7 million euros, hurt by a 48.8 million euro impairment charge as a resurgence in coronavirus cases deteriorated the business outlook for some of its customers.

The company said prospects for new business would depend on the impact of rising coronavirus infections and the corresponding curbs on economic activity.

It expects new business for the fourth quarter to be around 60% of the previous year’s level.

$1 = 0.8461 euros Reporting by Caroline Copley, editing by Vera Eckert and Mark Potter