Providian Financial Corp., whose regulatory problems are largely linked to its financial practices, said Tuesday that both its chief financial officer and his predecessor are resigning for personal reasons but that the predecessor would fill the post while an executive search company tries to recruit a CFO.
One departing executive, Jim Rowe, was promoted to chief financial officer last April and had previously been president of global e-commerce at Providian. As CFO, he reported to the other departing executive, David J. Petrini, who was promoted to vice chairman from chief financial officer when Mr. Rowe moved up.
Though Mr. Petrini will stay on until a successor is found by Russell Reynolds Associates, both executives appear to be taking part of the fall for Providians financial difficulties, which came to light in October. Both had worked for Shailesh J. Mehta, the Providian chief executive officer who resigned when the problems became public.
The new CEO, Joseph W. Saunders, who joined in November from FleetBoston Financial Corp.s credit card division, has been making changes aimed at strengthening the company and keeping it independent. In January, he hired Warren Wilcox to be vice chairman of planning and marketing and Susan Gleason to be vice chairman of operations. Both had worked with Mr. Saunders at Fleet Credit Card Services and, before that, in the credit card operation at Household International.
Providian has come under close regulatory scrutiny in recent months because of heavy losses on bad loans and from reduced fee income, as well as questionable accounting for its chargeoff rate. The company has been trying to sell some of its more risky credits but to date has only succeeded in selling some premium accounts, to J.P. Morgan Chase & Co. in January, at a discounted price.
A Providian spokesman said that Tuesdays resignations will help Mr. Saunders build a senior executive team in his own image. Joe has unequivocally stated his intention to continue to run Providian as a stand-alone, successful, and independent company, said the spokesman, Alan Elias.
Mr. Elias said that Mr. Petrini and Mr. Rowe have indicated that they wanted to experience other opportunities. They have played a very important role in helping to grow the company initially and also in restructuring the company in recent months.
Charlotte A. Chamberlain, an analyst at Jefferies & Co. Inc., said that Providian has lost at least half of their senior management team within the last 12 months.
Lately it has been difficult to interpret the companys moves, she said. The resignations could have been simply that, or they could have come at the behest of Mr. Saunders or even the regulators. You just dont know, she said. It was unexpected but not surprising.
Mr. Rowe joined the company in 1994. He held various posts, including as the head of investor relations. But his tenure as CFO began just a few months before many of the companys problems began to emerge.
Rowe was not CFO for a long enough time to influence anything, Ms. Chamberlain said. If you take them at their word, then the whole thing unraveled between August and October.
Ms. Chamberlain, who has a sell rating on Providian, said that even if the company wants to remain independent, Its not in their hands; its in the regulators hands. I have high hopes but no expectations.
