18th Apr 2018 09:25
LONDON (Alliance News) - CYBG PLC said Wednesday it will increase its provision for payment protection insurance claims by GBP350 million due to increased level of complaints and certain time consuming and more complicated cases.
Shares in the bank were trading 6.2% lower at 285.60 pence in morning trade.
The increased PPI provision will cover costs for closing out final cases, additional new customer complaints, and costs for administering redress programmes.
CYBG, which owns Clydesdale Bank and Yorkshire Bank, intends to recognise a pretax charge of GBP202 million in the six month period ended March due to the additional PPI provision. The charge is expected to result in a pro forma reduction in Common Equity Tier 1 ratio of 100 basis points, bringing it below the company's guidance range of 12% to 13%.
"The review of the final cases was more complicated and time-consuming than previously anticipated and, as a result, the group has increased the provision required to close-out the programme," the company said, adding it received around 59,000 additional complaints.
"The elevated level of complaints has been driven by a combination of factors including heightened media coverage, the FCA advertising campaign, and increased activity by claims management companies," CYBG continued.
The company expects the level of complaints to remain at an elevated level for a period of time, followed by a reduction in volumes and costs as the deadline for PPI complaints approach in August 2019.
The GBP305 million PPI provision amount is subject to the finalisation of the company's results for the six months ended March.
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