Virgin Money has declared a £139 million loss on the year after being hit with a deluge of PPI claims.
The newly re-branded Clydesdale Yorkshire Bank Group also admitted that the volume of claims and inquiries received as the PPI deadline broke on August 29th was so great that many had not been touched at the time the report was written.
The annual report revealed: “The Group received a significant number of complaints and information requests from claims management companies and direct from consumers in the run up to this deadline. As at 30 September 2019, a large number of these complaints remained unprocessed.”
The report said the bank had received a total of 629,000 claims up to September 30th and estimated that 86,000 further complaints will be added after it has had a chance to review the rush of claims received leading up to the deadline.
It said: “In line with the rest of the industry, we received an unprecedented volume of PPI information requests and complaints during August, which required us to take additional PPI provisions of £415m during the year.
“The scale of the PPI provision coupled with the anticipated acquisition and restructuring costs incurred this year meant that the Group has reported a statutory loss after tax of £139m.”
The bank’s year opened with a PPI pot of £275 million, but in anticipation of the surge of claims pre-deadline it added another £415 million for a total of £690 million of which £311 million remained unutilised at the time the report was written.
Even more cash
While it believes the remaining money will be enough to pay out future successful claims from the backlog of complaints there is a warning that even more cash might be required.
The report said: “As such, the factors discussed above mean 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.”
Also in the red
Virgin Money, which was taken over by Clydesdale Yorkshire last September, found itself £194 million in the red after having to set aside an extra £385 million for its PPI pot.
Its annual report said: “We, like the rest of the industry, were surprised by the scale of the PPI information requests and complaints during August.
“We have moved swiftly to address the issue and are leveraging innovative technology solutions to enable us to deal with genuine customer complaints as quickly, and as cost effectively, as we can.
“It is nonetheless frustrating to incur a further £385m in provisions as we look to close out this legacy issue.”