CYBG unveils plan for new base after swinging to H1 loss

● Further PPI costs drag group but plans to unite Glasgow staff in Bothwell St HQ

Clydesdale Bank owner CYBG has unveiled plans for a new head office in Glasgow after slumping to a first-half loss as paymentprotectioninsurance (PPI) costs mounted up.

The lender said it has signed a lease on office space to be built on Bothwell Street earmarked to open by 2024 in a move it says shows its “longterm commitment” to the city.

It came as the group, which also owns Yorkshire Bank, swung to a pre-tax loss of £95 million for the six months to 31 March, from a profit of £46m a year earlier.

Speaking to The Scotsman, chief financial officer Ian Smith deemed the results a “solid progress report”, and highlighted the 28 per cent rise in underlying pre-tax profits to £158m, which “reflects a lot of the hard work over the last couple of years getting the business in good shape”.

He also acknowledged the PPI issue, with CYBG recentthe ly revealing an extra £350m charge for PPI mis-selling claims, £202m of which was taken in the first half, ahead of the complaints deadline.

“It’s helpful that the end is in sight,” Smith said of the latter. “But it continues to be a big issue for us.”

Chief executive David Duffy sounded a note of caution, describing the UK economic outlook as “uncertain”. He added that consumer spending “has slowed and businesses have been holding back investment, which has had some impact on demand, but with credit conditions remaining benign”.

He also said economic uncertainty has hit customer demand in the mortgage market “while competition has remained intense and this has resulted in a challenging pricing environment”.

However, among things CYBG is “looking forward to”, Smith flagged Royal Bank of Scotland’s alternative remedies package, with the Clydesdale Bank owner saying its SME franchise is “well-placed” to benefit from this.

latter banking group also referenced its proposed £1.6 billion takeover of Virgin Money. The deal, revealed earlier this month, would see Virgin Money shareholders own about 36.5 per cent of the new business.

But analyst Gary Greenwood of Shore Capital cited concerns include price and complications of combining IT systems. He said: “We think it is by no means certain that CYBG will make its proposal formal when the deadline for making such an offer expires on 4 June.”

As for the new Glasgow head office, the group said leases due to expire in the next few years enabled it to “consider a new approach”.

The new site will unite staff from three locations, including its current head office in St Vincent Place, the Guildhall in Queen Street and Granite House in Stockwell Street, plus some smaller sites in the city.

Duffy said: “Glasgow is the historical home of Clydesdale Bank, which is why I am delighted to announce our plans to continue to operate in the city for many years to come.”