Schroders stakes a £7m bet on ailing Provident

CRISIS-HIT doorstep lender Provident Financial was boosted by major shareholder Schroders when it snapped up another £7.1m stake in the business.

In a vote of confidence for Provident, which issued a catastrophic profit warning last month, Schroders bought 800,000 shares for around 883p each.

It takes Schroders’ share up from 5pc to 5.6pc, and suggests that bosses see Provident’s dramatic 54pc plunge over the last fortnight as a buying opportunity.

The lender was hit by a panicked sell-off after it revealed that a disastrous IT upgrade meant debts were not being collected on time.

The dividend was axed and chief executive Peter Crook quit in disgrace.

Schroders’ holding lost £85.5m of value on the day of the announcement because of the turmoil.

Hargreaves Lansdown analyst Danny Cox said: ‘It’s a very common strategy for investors to try to make some profits from a bounce-back.’

Shares in Provident were down by 6.5pc, or 56p, to 800p yesterday.