Prov ident Financial in free fall

Dividend axed after 2nd profit warning in two months Boss quits as watchdog launches credit cards investigation

SHARES in Provident Financial crashed nearly 70pc yesterday as it lost its boss, axed its dividend and issued a second profit warning in two months.

A total of £1.7bn was wiped off the value of the doorstep lender – leaving it worth just £874m – as investors rushed to dump shares in the increasingly toxic company.

The brutal sell-off is thought to be the biggest one-day fall in history for a FTsE100 stock – with some of the City’s most powerful investors caught either side of the trade.

Losers included star fund manager Neil Woodford in the latest in a string of disasters to hit his investments.

But among the winners were several hedge fund bosses who had been betting the stock would fall – including Peter Davies, boss of Lansdowne Partners and former chancellor george osborne’s best man.

stunned City analysts said they were astonished at Provident’s fall from grace.

gary greenwood of shore Capital said: ‘This is, without doubt, a disaster for a company.’

The bloodbath came after Provident said bugs in new appointment-scheduling software meant debt collectors were turning up at the wrong times, making it impossible to bring in money from customers.

The lender is expecting a £120m hit to annual profits, and has cancelled plans for an interim dividend of 43.2p per share, adding that a full-year pay-out is also unlikely. Peter Crook, who has been chief executive of the firm since 2007, has resigned in disgrace.

At the same time, the business revealed it was being investigated by the Financial Conduct Authority over possible mis-selling of a card protection product which could cost it as much as £140m.

It sent shares plummeting 66.2pc, or 1155.5p, to an all-time closing low of 589.5p, meaning the business is now likely to crash out of the blue-chip Footsie index when it is reshuffled next week.

Woodford saw £326m slip through his fingers as a result of the plunge, but insisted the firm was now undervalued and would get back on track. He is the company’s second-largest shareholder with a 19.1pc stake, owned through his hugely popular investment funds. other Woodford favourites, drug giant AstraZeneca and venture capital business Allied Minds, have also suffered huge losses leading some to ask if the manager is losing his Midas touch.

other losers included Invesco Asset Management – the investment firm where Woodford made his name - which holds a 21pc stake in Provident.

Woodford said he was confident Provident will bounce back from yesterday’s decline. ‘I believe it is critically important to maintain a disciplined, fundamentally-based perspective in my investment analysis,’ he said. ‘With that in mind, I believe Provident Financial shares started the day undervalued, and have become even more so as a result of the market’s reaction to today’s news.

‘I am hugely disappointed by what has happened to the consumer credit division but I continue to believe that it will ultimately get back on track.

‘This business has been around for more than a century and I believe it will be around for many decades to come.’