Malcolm Le May takes over at troubled Provident Financial
Provident Financial has appointed Malcolm Le May, interim chairman of the troubled subprime lender, as its permanent chief executive, filling a void that has been open for five months since the company was plunged into crisis last August.
The decision, announced on Friday morning, comes only two weeks after Provident warned that losses from its doorstep lending business would be at the upper end of guidance for 2017.
The Bradford-based lender, widely known as “The Provvy”, has been looking for a permanent chief executive since Peter Crook quit in August following two profit warnings and a sharp drop in the share price.
In a further blow, Manjit Wolstenholme, who had stepped into the role of executive chairman following Mr Crook’s departure, died suddenly in November. The shares have fallen from over £30 in May 2017 to below £7.
Mr Le May, who has been on Provident’s board since 2014, was made interim executive chairman after Ms Wolstenholme’s death, putting him in charge of finding a new chief.
But the board were sufficiently impressed by how the former investment banker at Barclays, UBS and ING handled the situation that they asked him to do the job himself.
He may need to step down from some of his other non-executive roles, which include board seats at the spread betting company IG Holdings and at Hastings Group, the insurer.
Stuart Sinclair, the senior independent director at Provident, has been made interim chairman while the board seeks a permanent replacement.
Mr Sinclair said: “It became clear to the board as the search was progressing that the executive chairman who has been instrumental in driving the business forward over recent months was the best person to complete the turnround of Provident Financial as the new CEO.”
The UK’s biggest subprime lender has endured its toughest year since being founded in the 1880s to provide loans in the form of vouchers to be exchanged for food, clothing and coal.
Last year the 137-year-old company crashed out of the FTSE 100. It also faces investigations by the Financial Conduct Authority into one of its credit card debt forbearance products and its car-finance business Moneybarn.
The company had only £90m of surplus capital in mid-June, and investors are worried it will need to raise fresh equity at a deep discount to cover the cost of fines and penalties analysts estimate could be between £100m and £300m.
In February it said 4,500 self-employed agents would be replaced with a smaller number of permanent staff to collect the weekly debt repayments. However, the changes resulted in falling collection rates, with the volume of new loans extended also declining.
Last month the company said it was failing to “reconnect” with customers as quickly as it had hoped. Its rate of debt collection was up from 65 per cent of amounts due in September to 78 per cent by December.
Provident Financial shares opened up 1.3 per cent on Friday morning.