Tighter Marketing Focus Drives Leaner Workforce, CEO Says
SAN FRANCISCO, Jan. 3 /PRNewswire/ -- In a message to employees, Providian
CEO Joseph Saunders announced today that Providian Financial Corporation
(NYSE: PVN) will eliminate approximately 800 jobs by the end of the second
week of January. Saunders indicated that increased operating efficiencies and
the discontinuation of certain product offerings will allow Providian to trim
its workforce without adverse consequences for customer service. When the
newly-announced reductions are complete, Providian will have reduced its
workforce by approximately 11% since announcing its five-point strategic plan
in October, resulting in an annualized cost savings of approximately
$60 million. (On November 14, 2001, Providian announced the elimination of
550 positions in connection with the closure of its Henderson, Nevada
facility). Providian currently employs approximately 12,500 employees.
"Pursuant to our five-point plan, we are narrowing our marketing focus,
and reevaluating our expense base. That unfortunately means we need a leaner
workforce," said Saunders. "We are taking the actions we know we must take to
restore investor confidence and rebuild shareholder value, but I deeply regret
the need for these reductions. I very much hope that we can go through this
process with as much fairness and grace as our circumstance permits."
Providian said that it is continuing to review its strategic options and
may announce additional steps in the future. Depending upon the actions
taken, the Company could announce additional personnel reductions, potentially
including the transfer of certain U.S. and international employees to new
employers in connection with the sale of assets or businesses.
"Providian's workforce includes a wealth of tremendously talented and
dedicated employees," said Saunders. "The employees who are leaving have
earned this company's gratitude, and we will try to help them land on their
feet." Saunders noted that the Company would provide all laid-off employees
with transition benefits, including both cash payments and outplacement
assistance.
On October 18, 2001, Providian announced a five-point strategic action
plan for restoring investor confidence and rebuilding shareholder value.
Since that time, the Company has made a series of announcements as it has
proceeded with implementation of its plan. These announcements have included:
-- Retention of Salomon Smith Barney and Goldman Sachs as investment
advisors to review strategic business options and assist the Company in
managing its balance sheet and liquidity (10/31/01);
-- Exploration of the possible sale of approximately $3 billion in
high-risk assets (11/14/01);
-- Commitments from its investment advisors to establish a structure for
securitizing approximately $900 million in credit card assets
(11/14/01);
-- Closure of the Company's Henderson, Nevada, facility (11/14/01);
-- The hiring of Joseph Saunders as CEO, replacing former CEO Shailesh
Mehta (11/26/01);
-- Consummation of an agreement with the Company's regulators governing
the financial management of the Company (11/28/01); and
-- Intentions to explore the potential sale of the Company's international
credit card businesses (11/28/01).
Providian expects to take a first quarter 2002 charge of approximately
$10-$15 million in connection with the January personnel reductions. The
Company previously announced it would take a $12 million charge in the fourth
quarter of 2001 in connection with the closure of its Henderson, Nevada
facility. The Company indicated that additional charges associated with
personnel reductions are likely in the first and second quarters of 2002.
San Francisco-based Providian Financial is a leading provider of credit
cards and deposit products to customers throughout the U.S. The Company has
more than $32 billion in managed receivables and more than 18 million customer
accounts.
This release contains forward-looking statements as to the Company's
expectations, intentions and goals that are subject to the "safe harbor"
provisions created by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include expressions of "belief," "expectations,"
"intentions" and other words of similar import, statements as to industry and
economic trends, and other statements that are not historical facts. Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those in the
forward-looking statements. Among the significant risks and uncertainties
are: competitive pressures; factors that affect delinquency rates, credit
loss rates and charge-off rates; general economic conditions; consumer loan
portfolio growth; changes in the cost and/or availability of funding due to
changes in the deposit, credit or securitization markets, changes in the way
in which the Company is perceived in such markets, and/or conditions relating
to existing or future financing commitments; the effects of government policy
and regulation, including restrictions and/or limitations on the Company's
minimum capital requirements, deposit taking abilities, growth, accounting
policies, and/or underwriting criteria; product development; legal and
regulatory proceedings; interest rates; acquisitions; one-time charges;
extraordinary items; the ability to attract and retain key personnel; the
impact of existing, modified or new strategic initiatives; and international
factors. Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to update any forward-looking statements. More information on
risks and uncertainties relating to the Company are available in the Company's
filings with the Securities and Exchange Commission, including its annual
report on Form 10-K, quarterly reports on Form 10-Q, and current reports on
Form 8-K.
SOURCE Providian Financial Corporation
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Related links:
http://www.providian.com
CONTACT:
Media, Alan Elias, +1-415-278-4189, or
Investors, Jack Carsky, +1-415-278-4977, both of Providian
Financial Corporation
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