Analysts brand Provident's home credit business as 'worthless'
THE corporate broker to Provident Financial, which owns Ireland's largest moneylender, Provident Personal Credit, has said the moneylending business is worthless.
Analysts at JP Morgan Cazenove, the company's broker and adviser, said it gives "zero value" to Provident's home credit business. Provident's doorstep-lending business in Britain is in the midst of a botched and costly restructuring.
It is replacing self-employed sales and collection agents in the UK with its own staff.
Provident Personal Credit is licensed by the Central Bank here to charge interest rates of up to 187pc and is thought to have around 200,000 customers in Ireland. Agents for the moneylender tend to come to people's doors to offer the high-cost credit and collect the repayments.
The company said earlier this year that it had no plans to replace self-employed agents in Ireland with employed staff.
JP Morgan was among several brokers to slash their forecasts on Provident after one of the most spectacular share price collapses in the history of the FTSE 100 share index. On Tuesday, Provident Financial issued a profits warning, saw its CEO step down and admitted it is being probed by regulators.
All of that caused its share price to crash by 75pc at one stage, the largest slump in its share value on record.
CEO Peter Crook resigned as the firm announced its door-to-door loan business would lose up to £120m (€131m) this year.
It has around 800,000 customers in Britain, mostly those with poor credit ratings who are typically charged huge annual interest rates.
Headquartered in Bradford, the firm laid off 4,500 freelance debt collectors recently in a multi-million euro overhaul but then struggled to hire a new workforce of full-time agents.
The profits warning comes as the Irish League of Credit Unions encourages more of its member credit unions to sign up to a lower-cost loan scheme designed to take on moneylenders.
The 'It Makes Sense' loan is offered by over 100 credit unions.
Credit unions can charge no more than 12pc a year.