* Provident will no longer offer high-cost products
* Reports 2020 loss versus year-ago profit
* Looks to place CCD into managed run-off or sell it
(Adds details from statement)
By Muvija M
May 10 (Reuters) - Provident Financial on Monday
called it quits on its doorstep lending division, putting 2,100
jobs at risk, as the pandemic hit turnaround efforts for a
business that survived the Wall Street crash of 1929 and the
global financial crisis.
The company, a sub-prime lender since it was established in
1880, said it plans to put the business into managed run-off or
consider a disposal. The exit is expected to cost Provident up
to 100 million pounds. ($140.71 million)
Shares in Provident, which lends to people who do not meet
the lending criteria of mainstream banks, fell 7% and were the
biggest fallers in the UK's mid-cap index by 0737 GMT.
Provident had been trying to revive the business after
botching an overhaul of the division in 2017 when it sought to
replace its army of self-employed doorstep collection agents
with direct employees.
But its revival plans were derailed by the COVID-19 crisis,
which hammered lending volumes and drove up costs.
"In light of the changing industry and regulatory dynamics
in the home-credit sector, as well as shifting customer
preferences ... we have decided to withdraw from the home-credit
market," Chief Executive Officer Malcolm Le May said.
'MORE SUSTAINABLE MODEL'
The company said it planned to build on its existing
unsecured personal loan product expertise during 2021, in the
"mid-cost" segment of the market.
Provident said the unsecured loan business was an important
step towards its plans to become a broader banking group to the
financially underserved customer.
Analysts at Panmure Gordon said: "This (focus) entails a
lower rate of receivables growth but a more sustainable model."
Goodbody analyst John Cronin said the new initiative was
likely to be channelled through Provident's credit card business
Vanquis.
The company in March had outlined a 50 million pound plan to
settle a jump in complaints and claims against its door-to-door
lending business during the COVID-19 crisis.
A UK court has now granted leave for the settlement plan,
with a meeting of the company's creditors set to take place in
July, Provident said on Monday.
The business is also under a regulatory probe over conduct
issues, which Provident reiterated was unlikely to end until at
least the end of 2022.
Provident on Monday also reported a loss before tax of 113.5
million pounds for 2020 versus a year-ago profit of 119 million
pounds.
($1 = 0.7107 pounds)
(Reporting by Muvija M in Bengaluru, Editing by Sherry
Jacob-Phillips and Jane Merriman)
