(Reuters) - Subprime lender Provident Financial (PFG.L), which has lost close to 60 percent of its market value this week after a second profit warning in quick succession, said on Friday that it had replaced the managing director of its beleaguered home credit business.
Provident's shares were up 20.3 percent at 900.93 pence at 0840 GMT, making it the biggest gainer on Europe's Stoxx index. (bit.ly/2iwuV9F)
The firm’s earnings have been hit by unresolved problems at its door-to-door lending business, with its woes compounded by an additional disclosure on Tuesday that its banking unit -Vanquis - has halted sales of a loan repayment product pending an investigation by Britain’s financial watchdog.
Newly appointed Chairman Manjit Wolstenholme announced changes to the consumer credit division’s management structure on Friday.
Chris Gillespie, who had been managing director of Provident’s consumer credit division before leaving in 2013, is to rejoin the firm as managing director of the home credit business. He is replacing current business head Andy Parkinson with immediate effect.
“Gillespie’s focus as the new managing director will be on re-establishing relationships with customers, bringing collections back to a normal level, and stabilising the operation of the business,” Provident said.
Provident also said Luke Enock will take on the role of deputy managing director of the home credit business and Greg Cant, director of corporate finance and development at Provident will help with project management.
“While some may take comfort from the reinstatement of the previous CCD director, we note that the business has now moved in a very different direction under the new model and the scope for reversing or even partially reversing the operational changes is limited,” Liberum analysts Portia Patel, said.
“We are not surprised to see further management departures following the CEO stepping down, and we would not be surprised to see more, including in Vanquis,” Patel, who rates the Provident as “Sell”, added.
Provident’s profit warning also prompted the departure of CEO Peter Crook and suspension of its dividend.
The lender first warned about problems at its home credit business in late June, but said on Tuesday the situation had deteriorated and the business was now set to lose a lot more money this year.
Founded in 1880, Provident has been trying to reorganise a door-to-door lending business that has traditionally relied on self-employed agents and collecting repayment through weekly visits. But it has been unable to recruit enough people for its plan to replace external agents with direct employees.
That has resulted in lower sales and a debt-collection backlog.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong