Dr. Roger Gewolb provides commentary on the NSF and Provident Financial merger

In April, Dr. Roger Gewolb was featured in the Evening Standard giving his views on the Provident Financial and NSF merger. Please find his full commentary below: “This proposed takeover is a terrible idea. Both companies have unenviable track records, so how will that improve things? The deal will reduce competition in an already limited doorstep lending market. Less competition means less choice and probably harsher conditions for borrowers. Doorstep lending is crucial to those with very poor credit. They will turn to unlicensed lenders with no code of practice and no regulations to control them. Proof of this is that the Competition and Markets Authority (CMA) has already put a freeze order on the deal, so Provident and NSF cannot do anything until the CMA completes its investigation and no end date for this has been given. NSF said they will sell their doorstep lending company, but there is no sign of this yet. As Patrick Snowball, chairman of Provident said, the only people who benefit from this takeover are those who hold shares in both Provident and NSF. There is no cash, nor premium, in the deal and the senior management of NSF is the former management of Provident. Does this mean the other NSF shareholders are being disadvantaged by their directors? The new proposal, for Provident to embark on a “Pacman defence”, where the Provvy would acquire its stalker NSF, is just as undesirable as the original takeover proposal by NSF, as in both cases competition is seriously reduced in the doorstep lending market. The whole situation is becoming as insane as the Brexit muddle; Provvy appears to have scored an amazing goal by pointing out alleged improper dividends by NSF and NSF, he believes, is correct when they say that the Provvy management is not familiar enough with their industry.”