"Clearly Awful News": UK Subprime Lender Provident Crashes Most On Record, CEO Quits

Tyler Durden's picture

UK subprime lender Provident Financial Plc crashed the most on record, its stock plunging over 73%, on what analysts called a "quadruple whammy": a profit warning forecasting a full-year loss, scrapping its dividend, a regulator probe into its Vanquis Bank unit, and the departure of CEO, the aptly named, Peter Crook. “This is without doubt a disaster,” said Shore Capital's Gary Greenwood. “Future profit performance will depend on management’s ability to rescue the situation, which is highly uncertain. We expect that further heads will roll.”

As a result, shares of the Bradford, UK-based company dropped more than 73% to 521 pence in London morning trade. The stock is down 82% this year, wiping more than 3 billion pounds from its market value.

In what may be the beginning (of the end) of yet another subprime bubble bursting (we have lost count which one this is), in its second profit warning in two months, the subrime lender said it now expects a "pre-exceptional loss" for the home credit business of between 80 million pounds ($103 million) and 120 million pounds, after previously predicting a 60 million-pound profit. The company also cited further deterioration at its home credit business after a botched roll-out of new technology this year, when it scrapped a more-than-century-old model of self-employed door-to-door agents. Crook, who was CEO for a decade, said in June that many of its 4,500 salesmen and debt collectors quit or stopped working as hard when they were informed they would be replaced by a smaller number of iPad-toting full-time staff, according to Bloomberg.

Peter Crook

Meanwhile, the company said the U.K. Financial Conduct Authority is investigating the Vanquis Bank credit-card unit, and the regulator had previously ordered Provident to stop offering a particular repayment product, the company said Tuesday. Provident scrapped its interim dividend and said a full-year payout is also unlikely. Manjit Wolstenholme will temporarily run the firm as executive chairman. Provident said Tuesday that the FCA ordered the company to stop offering "repayment option plans" in April 2016. The products had been contributing about 70 million pounds in revenue a year.

“Given that the FCA investigation has the potential to be material to the company, investors are likely to take the view that this investigation should have been disclosed when it was known,” RBC Capital Markets analyst Peter Lenardos said in a note. “The shares are not investible until greater clarity is received, which may not be until next year,” he said, calling the probe, loss, dividend suspension and CEO’s departure a “quadruple whammy.”

As Bloomberg reports, While Provident didn’t make any mention of the broader U.K. economic environment or Brexit, its profit warning comes as the Bank of England cautions that the nation’s consumer credit market is overheating after years of low interest rates and low defaults bred complacency. Crook had previously said Provident’s business model was more resilient to an economic downturn than the big banks; he was wrong.

Meanwhile, as revenue from its old sales force continues to decline, its new technology isn’t panning out either.

The routing and scheduling software designed to help the 2,500 full-time digital-savvy staff replacing the door-to-door salesmen “has presented some early issues, primarily relating to the integrity of data,” Provident said, while “the prescriptive nature of the new operating model has not allowed sufficient local autonomy to prioritize resource allocation.”


Debt collection performance has fallen to 57 percent this year from 90 percent at the end of 2016, according to the statement. Likewise, weekly sales were running at about 9 million pounds lower in the same period.

Putting the company's operations in context, Provident serves 2.4 million British customers, many of them unemployed or on
Extending credit to the working class had been good to
Provident: its stock had tripled over a decade that saw other British
banks collapse or get bailed out in the financial crisis; of course, it has given up most of it back now that the time has come to collect that money.

Ironically, Provident was
started in 1880 by Joshua Waddilove, a philanthropist and social
reformer who saw extending door-to-door credit as a way to alleviate

* * *

Meanwhile, one look at the sellside commentary this morning reveals that virtually everyone thinks this particular subprime lender is about to be New Centuried:

RBC (Peter K Lenardos)

  • Expect ongoing substantial losses for shares and “would not be buyers at any price”
  • Recent share correction was making RBC warm to Provident; today’s announcement means “shares are not investible until greater clarity is received, which may not be until next year at the earliest”

SHORE CAPITAL (Gary Greenwood)

  • Dividend withdrawal and CEO resignation is a “disaster,” and company’s ability to rescue the situation is “highly uncertain at present, making accurate forecasting extremely difficult”
  • Sees risk the FCA decides to review sales of Repayment Option Plan product in the period prior to that announced
  • Cannot rule out the need for equity issuance and expects “further heads will roll” after CEO departure
  • Suspends recommendation (previously buy)

JEFFERIES (Phil Dobbin)

  • “Clearly awful news” which will deeply impact the share price
  • FCA review adds more uncertainty on top of profit warning for home credit business
  • Notes that home credit is a short duration business and will need to see momentum turning soon

LIBERUM (Portia Patel)

  • Notes 2016 NAV was 541p and given the uncertainty ahead and suspension of dividends, expects a realistic trading range to be 1x-2x NAV (541p – 1082p)

Source: Bloomberg

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casapi's picture

NO bailouts goddamit

Maplehood's picture

Cue the fat jokes in 3, 2, 1...

NoDebt's picture

"Provident serves 2.4 million British customers, many of them unemployed or on welfare."

I think I have identified the flaw in their business model.


jcaz's picture

Naw, I stopped reading when I saw the pic of dough boy Crook-  he needs some time in ditch with a shovel-  

Entitled is no way to go thru life, boy.....

SethPoor's picture

Cue the crooked peter jokes . . .

StackShinyStuff's picture

Let's have a look at what these "analysts" had to say 82% ago...

HowdyDoody's picture

Peter Crook - nominative determinism at work?

willy up the creek's picture

Excellent comment.  Very funny.

seabass974's picture

In the UK there are still 48 months zero pcnt 'balance transfer' deals so these people can roll the debt (seemingly) indefinately.


spavarotti's picture

those leeches have branches in other EU countries too

JohnGaltUk's picture

Fat will do with the wise cracks, fats enough please.

DetectiveStern's picture

That man is Yorkshire in human form.

Faithdefender's picture

And so it finally begins..

Stan522's picture

Looks like he's been eating their profits.....

Obsidian Samctum's picture

Lol ceo name peter crook. Lolol

BandGap's picture

But...the children.

Arrest Hillary's picture

A Muslim who is prepared to rape your wife and children and cut your throat .... is not incumbered with an animus to pay off his student loan ?

SillySalesmanQuestion's picture

Peter Crook has an alias...Dick Robber.

A. Boaty's picture

Lending to poor people doesn't pay? Who knew?

TheSilentMajority's picture

Peter Cook is being legally represented by the law firm Dewey, Cheatam & Howe.

Ta da!

buzzsaw99's picture

and defense witness Hanover Fiste.

Yes, I know Peter Crook. He is most kind and generous...

He is a cup overflowing with the cream of human goodness. I have never known him to do anything immoral...

And he has never done anything illegal...

He has always been a good, law-abiding citizen...

A community-conscious individual...

bamawatson's picture

He drives a Hard bargain.

willy up the creek's picture

I always liked, 'Blindem, Cheatham, and Howe'.

Moving and Grooving's picture

Other variant - 'Cheatem, Steelem, and Howe'.

willy up the creek's picture

I always liked, 'Blindem, Cheatham, and Howe'.

CRM114's picture

A very dodgy operator that switched from helping the poor to exploiting them about 20 years ago. If the regulatory authorities have any teeth at all, they will be shut down. 

Nice to see a management team screwed up by the employees they tried to screw! ;)


Sadly, this is not the end of sub-prime - others will step in and restore the door-to-door collection model with the existing 'agents', if they have any sense. This is basically demanding money with menaces these days, but there we are.

JohnGaltUk's picture

Nobody puts a gun to their head and forces them to take these loans.

You have to be dumb to take out a pay day loan.

Moving and Grooving's picture

All very legal in the West. 'Payday loans' indeed. So many people are strung out by these slimy bastards ... 

micmac's picture

where's the punch bowl?

Moving and Grooving's picture

... and WHAT THE FUCK is floating in it? Who put that in there!?

JoeTurner's picture

Subprime is the new prime beyotches !

tuttisaluti's picture

First domino fell

To Hell In A Handbasket's picture

Provident charge 49% on a loan up to around the £2000 mark and advertise it, like they are providing a competitive service and doing the poor punter a fucking favour. Any nation that allows their state to allow this sort of lending, deserves social strife and the fabric of society breaking down.

This form of ursary is fucking egregious and directly harms societal cohesion. Where is the Alt-Left and Alt-Right on this matter? Oh that's right, they don't care about that, except identity politics, and too busy wanting to kill each other. Just as TPTB like it. Useful idiots.


Sandmann's picture

Tories always oppose Usury Laws........it deters the truly desperate from seeking loans now the Social Security is so tight-fisted on Emergency Loans and the flexibility of Supplementary Benefit was eradicated by the Tories under Margaret

JohnGaltUk's picture

Dude socialism is over in Europe now. All western governments are broke.

Think Greece and that is our future, except I will be off to NZ.

gregga777's picture

I hope that you don't have your assets stashed in the banks or on CON Street.

itstippy's picture

"Provident serves 2.4 million British customers, many of them unemployed or on welfare. Extending credit to the working class had been good to Provident."

People who are unemployed and on welfare are not "working class".  They are "not-working class" and are a very poor target clientel to loan money to.  Loaning money to people who have jobs and pay their bills is a good business model.  Loaning money to people who do not have jobs and do not pay their bills is not a good (long term) business model.  It works OK as long as you can pretend that the loans are money-good, and you can attract new investors to the company.  When it becomes apparent that the loans are NOT money-good, the balance sheet collapses and investors flee.

Go ahead - loan my unemployed Brother-In-Law fifty bucks with the promise he'll pay you back in two weeks.  See how it works out for you.

Cheapie's picture

Any relation to Herbert and Marion Crook?

Yellow_Snow's picture

Obvious lession - Never invest in a company run by a Crook...

Cheapie's picture

Provident Financial's  board of directors lists a Rob (Anderson) as well. And a Straw man (John Straw). Did Rob work closely with Crook?

Moving and Grooving's picture

Unger was over Oevuer, and Oevuer was under Dunn. Got it.

junction's picture

That was fast, wiped out in 24 hours.  Faster than Lehman Brothers and Norhern Rock.

small axe's picture

the sarakin lenders of Japan, the payday loans of America ... every broken system has its scum.

Of course the traditional credit card companies with consumer rates in the double digits despite record low interest rates are totally fair and above board ... right?

Sugarcandy Mountain's picture

Peter Crook

Hahaha. At least he's honest. Biggest laugh i've had all day... yeah, it's been a slow one.

Sandmann's picture

This isn't the first time with Provident Financial.......it has a rack record of management scandals prior to 2007. Peter Crook is an FCA but his replacement was a Dresdner Kleinwort Wasserstein.......so The City will prefer the Banker to the accountant.

Shoddy firm in a shoddy business but it paid Peter Crook £6 million pa

BanyakUang's picture

Watch an episode or two of "Can't Pay, We'll Take it Away" on Netflix for a little colour on the UK personal debt issue -- also the program  gives one an appreciation of the impact of socialism and changing demographics.



NubianSundance's picture

Mad Sam DeStefano was also a 'philanthropist and social reformer who saw extending door-to-door credit as a way to alleviate poverty' . /sarc

bjax's picture

I belive Peter Crook is one from one of the Crook banking families. No one can remember the first Crook, but they are still here fleecing the poor.

williambanzai7's picture

Peter Crook?


Haitian Snackout's picture

Replaced 4,500 experienced salespersons and collectors with I-phone toting, ( digital savvy ) staff. What could possibly go wrong?