The company stated that it was discouraged from further operation in Slovakia by laws for protecting debtors, passed by the ruling Smer party last year, as quoted by the Sme daily,
The International Personal Financial company, which owns Provident Financial, announced that the new rules will cause losses amounting to GBP 18.6 million (€23.6 million) and that if it does not quit, the losses would rise even higher.
Provident is dissolving its network of some 800 agents through whom it has provided loans and collected instalments directly at clients’ homes. It added, however, that all loan contracts continue to be effective; the firm’s decision not to continue on the Slovak market will change the status of current loans.
The company focused on low-income clients without property who might have posed a risk for other lending firms. The British company was successful in pressuring repayment thanks to its system which had agents in regions to collect the debts, agents who often knew the debtors personally or were their acquaintances.
Provident Financial announced on its website it already suspended offering loans on December 18, while it will continue to service the already existing ones.
The new law concerning consumer loans stipulates, among other things, a license process for creditors, requiring non-banking institutions to come under the central bank’s (NBS) supervision and get a license. However, Provident Financial managed to obtain such a license, the SITA newswire wrote.