Will Seek Sale of International Businesses
SAN FRANCISCO, Nov. 28 /PRNewswire/ -- Providian Financial Corporation
(NYSE: PVN) announced today that it has agreed with the U.S. agencies that
regulate its Providian National Bank and Providian Bank subsidiaries to
develop formal plans for managing their capital and growth.
"These steps are consistent with our five-point plan for rebuilding
investor confidence and shareholder value," said Providian President and CEO
Joseph Saunders. "We have already begun work on these initiatives, and have
made significant progress. Providian's management and Board of Directors
fully share our regulators' interest in prudent management of the Company's
banking subsidiaries."
Under key terms of the agreements entered into with U.S. regulators,
Providian's bank subsidiaries will: prepare and submit three year capital
plans to their regulators accompanied by a capital and liquidity support
agreement from the parent corporation; submit growth management plans
including a limitation on growth in total assets of no more than 2.5 percent
per quarter until the agencies have accepted their capital plans; review their
loan loss reserves under an allowance program to be submitted to their
regulators; cease marketing and account origination in the Standard Market
(which Providian has already substantially curtailed under its five-point
plan); and obtain regulatory approval before paying dividends to the banks'
parent company.
The regulatory agencies with which Providian has agreed to undertake these
measures include the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, and the Utah Department of Financial
Institutions.
The Company also announced that it will seek to sell its Argentina and
United Kingdom credit card businesses, which together comprise $188 million in
deposits and $585 million in receivables. Pending a sale, and while it is
implementing its agreement with the U.S. regulators, the Company has agreed
with the U.K. Financial Services Authority that its U.K. branch will not
accept new deposit customers or solicit new loan applications.
"We will continue to service our existing international customers and
depositors and will work hard to ensure a smooth transition to new ownership,"
said Mr. Saunders. "This decision to sell our international businesses is
also consistent with our five-point plan to refocus Providian's operations and
to rebuild investor confidence and shareholder value."
On October 18, 2001, Providian announced a five-point strategic action
plan designed to address underperforming areas, focus the business on market
segments with the best risk-adjusted returns, reduce expenses, and manage its
capital, reserves and liquidity. On November 14, the Company announced that
it had received a commitment from Salomon Smith Barney and Goldman, Sachs &
Co. to securitize at least $900 million in credit card receivables, and that
it is working with its investment bankers to structure a possible sale of
approximately $3 billion of higher-risk credit card receivables. The Company
also announced plans to close its facility in Henderson, Nevada, reducing
expenses by an estimated $18 million annually. On November 26, the Company
announced the appointment of Joseph Saunders as its new president and chief
executive officer, effective immediately.
Providian said that it is continuing to review its strategic options and
may announce additional steps in the future, possibly including further asset
sales and other strategic and capital enhancements.
About Providian
San Francisco-based Providian Financial is a leading provider of credit
cards and deposit products to customers throughout the U.S., and also offers
credit cards and deposit products in the UK and in Argentina. The Company has
more than $32 billion in managed receivables and more than 18 million customer
accounts.
SOURCE Providian Financial Corporation
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Related links:
http://www.providian.com
CONTACT:
media, Alan Elias, +1-415-278-4189, or
investors, Nancy Murphy, +1-415-278-4483, both of Providian
Financial Corporation
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