FTSE reshuffle: Royal Mail and troubled Provident Financial relegated from blue-chip index

William Turvill
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UK Government Announces Privatisation Of Royal Mail
Royal Mail and Provident will be replaced by Berkeley Group and NMC Health (Source: Getty)

Troubled sub-prime lender Provident Financial has crashed out of the FTSE 100, the London Stock Exchange today confirmed.

Royal Mail will also drop out of the blue-chip index in September, with housebuilder Berkeley Group and United Arab Emirates-based healthcare provider NMC Health taking their place.

Meanwhile, crisis-hit construction firm Carillion is to drop out of the FTSE 250, along with van hire company Northgate and Petra Diamonds.

Promoted into the second division are newly-listed Alfa Financial Software, online gambling firm 888 Holdings and Sequoia Economic Infrastructure Income Fund.

“Relegations for Carillion and Provident Financial will come as no surprise,” said Hargreaves Lansdown equity analyst Nicholas Hyett.

“Both have plummeted following eviscerating profits warnings, largely of management’s own making.

“Carillion fell foul of the outsourcers’ kryptonite, bidding too aggressively for contracts that ultimately proved loss making.

“Meanwhile Provident managed to botch an organisational revamp to such an extent that a 137 year old business, which was robustly profitable last year, is now facing losses of up to £120m.”

Hyett said blame for Royal Mail’s demotion should not necessarily be laid at chief executive Moya Greene’s door, however, with the group continuing “to face tough market conditions”.

He added: “Long term we think Royal Mail is better positioned than many operators to weather those headwinds, and the international business is proving surprisingly successful.”

Read more: Provident Financial shares rise 22 per cent as it shakes up credit business

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