FINANCIAL HIT
The owner of Clydesdale and Yorkshire banks jolted its investors yesterday by revealing it has recorded what one analyst branded a “disastrous” additional £350 million financial hit after seeing a surge in paymentprotectioninsurance (PPI) claims ahead of the new complaints deadline.
CYBG announced to the City that it would increase the money it has set aside for “legacy” PPI costs and that it would impact the lender’s half-year results due to be unveiled next month.
The group’s shares fell sharply after the bank said it saw the number of PPI mis-selling claims soar by more than expected in its first half to endmarch 2018 to around 59,000, as the deadline for complaints nears on 29 August 2019.
CYBG said: “The elevated level of complaints has been driven by a combination of factors including heightened media coverage, the FCA (Financial Conduct Authority) advertising campaign and increased activity by claims management companies.”
The bank, formerly owned by National Australia Bank
0 The blow for CYBG comes after new jump in PPI mis-selling claims
GARY GREENWOOD (NAB) before it floated on the UK stock market as an independent entity, added: “The group now expects the current level of complaints to remain at an elevated level for a period of time, followed by a reduction in volumes and costs as we approach the time bar in August 2019.”
The FCA, which is responsible for policing financial markets and investor protection, has been leading a beefedup eleventh hour marketing push to help raise awareness of the PPI complaints deadline among consumers. It includes advertisements featuring an animatronic model head of movie star Arnold Schwarzenegger, whose many action films include The Terminator. In it, the star urges people who might have been mis-sold PPI to take action quickly if they believe they are owed redress.
The new provision will see CYBG take a £202m pre-tax charge on its balance sheet for the first half, as it said the other £148m in the PPI provision was covered by a conduct
“Without doubt, this isabitofadisasterfor CYBG, with the original indemnity provided by National Australia Bank failing to provide the full protection.”