With less than 100 days to go to the PPI claims deadline in August, CYBG – the former Clydesdale-Yorkshire Bank – has added another £30 million to its PPI provision.
Announcing the increase in its half year figures, chief financial officer Ian Smith said the new money was added because of an increase in the number of claims received as the deadline approaches.
However, it was also needed after the bank re-assessed the cost of investigating the 533,000 complaints it has received overall.
But even this additional £30 million may not be enough to cover the eventual PPI bill.
In his statement Mr Smith said: “There is a risk that existing provisions for PPI customer redress may not cover all potential costs.
In light of this, the eventual costs of PPI redress and complaint handling may therefore differ materially from that estimated and further provision could be required.”
August 29th is the deadline for making any new complaints but the British banking industry is likely to have millions of claims still under investigation and the total amount of compensation to be paid will not be known for some months.
£2.67 billion set aside
CYBG has so far set aside a total of £2.67 billion of which £156 million remains in the pot to cover the cost of future successful claims and the administration process.
Said Mr Smith: “The overall provision is based on a number of assumptions derived from a combination of past experience, estimated future experience, industry comparison and the exercise of judgement in the key areas identified.
“There remain risks and uncertainties in relation to these assumptions and consequently in relation to the ultimate costs of redress and related costs.”
In its half year figures CYBG said its £1.7 billion merger with Virgin Money had helped it to a statutory profit of £42 million for the half year, reversing the £95 million loss at the same stage last year.
But Mr Smith warned there could be further branch closures following the Virgin merger as there could be ‘branch overlap’ in a number of towns.
He said he would ‘absolutely consider’ closing branches which are ‘less well used’, adding: “The other thing you will see over the next couple of years is that there are instances where we have a Clydesdale or a Yorkshire branch very close to a Virgin Money branch. And clearly, we only need one. So, there is going to be an element of de-duplication over the next couple of years in the branch footprint.
“And I think that many people get that now. You have to do this in a very customer-sensitive way, and make sure they have continued access to banking. But I think people understand that now.”