Lender’s investors lose £1.2bn

Provident Financial’s top five investors lost £1.2bn between them as the lender’s shares collapsed as it issued a profit warning and said its boss was leaving with immediate effect.

Shares crashed 66pc to 589.5p, wiping £1.7bn off the sub-prime bank’s market value.

“I’ve never seen anything like this in a decade,” said one major investor in the company, referring back to the financial crisis. “It’s unprecedented,” said a banking analyst. “It’s impossible to value the business – it’s a part that’s significantly loss-making, it’s facing a regulatory review, it’s scraped its dividend – and tomorrow’s headlines are only going to drive it lower.”

The losses among investors were huge. According to Bloomberg data, top shareholder Invesco, with a 29pc stake, saw its holding plunge from £750m to £255m.

Neil Woodford, the star fund manager, took a significant hit, with his 18pc holding – the second largest – falling £309m in value to £157m. The next three leading investors – Capita, Blackrock and Marathon, with a combined holding of almost 23pc, according to Bloomberg – lost nearly £390m between them.

At the end of 2015, Provident shares hit a record £33.67, driving it into the FTSE 100, but have since tracked lower as clouds gathered around the lender’s business. Short sellers – who bet against a business, in effect “borrowing” shares in the hope they will fall so they can buy them at a lower price – have also taken a recent interest in Provident.

Official FCA data shows that by early August, hedge funds AQR and Systematica had short positions representing 1.01pc and 0.5pc of Provident’s shares, joining Lansdowne Partners, which has a 2.19pc position dating back to last spring. The collapse of Provident’s shares mean they are likely to have landed huge windfalls.