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Provident faces FTSE 100 axe after plunge


Troubled doorstep lender Provident Financial looks set to fall out of the FTSE 100 Index after its share value collapsed following a profit alert.

A stock market quarterly review has indicated that Provident is on course to be relegated from the index of the UK’s 100 biggest listed companies.
The announcement was based on its closing position on Thursday and, though the group enjoyed a bounce-back of 22% on Friday after unveiling a management shake-up, the dramatic scale of the fall earlier this week means it is still facing the axe from the top-flight list.
A final decision will be made after the market closes next Wednesday and, save for a major recovery before then, this will see Provident slip out of the FTSE 100 on 15 September.
Shares fell by 66% on Tuesday when Provident alerted investors to a sharp downgrade in annual earnings after a “rapid deterioration” in its consumer credit business.
The profit warning – the second by the company in quick succession – also saw the departure of chief executive Peter Crook.
Problems centred on changes to the business as it moves from using self-employed door-to-door agents to full-time “customer experience managers”.
Provident had warned in June that the planned changes had resulted in agents leaving and a deterioration in sales and collection rates.

In its update this week it admitted that attempts to restore performance were “falling a long way short”.
On Friday, Provident was the FTSE 100’s biggest riser after the group announced the immediate departure of Andy Parkinson, managing director of the home credit division, to be replaced with Chris Gillespie, who previously held a similar role at the business.
But the shares were still worth only about half of their value at the start of the week.
Manjit Wolstenholme, who has taken charge as Provident’s executive chair after Mr Crook’s departure, has begun a review of the business and on Friday announced the management shake-up.
Provident said the appointment of Mr Gillespie to head the home credit business would see him focus on “re-establishing relationships with customers, bringing collections back to a normal level, and stabilising the operation of the business”.
The lender has around two million customers in the UK, offering credit limits of £250 to £4,000.
It provides credit to people who do not meet the loan criteria of mainstream banks.

Source: SKY