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CYBG receives eight months’ PPI requests in a month

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  • 06/09/2019
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CYBG receives eight months’ PPI requests in a month
Clydesdale and Yorkshire Bank (CYBG) has notified the markets that it has increased cost provisions against legacy payment protection insurance (PPI) claims by £300m to £450m.

 

The company saw 20 per cent wiped off its share price on Thursday 5 September as a result. Shares were trading at 113.2p on Friday 6 September, up from the day opening price of 112p.

The bank received more than eight months’ worth of requests in one month ahead of final deadline on 29 August.

This amounted to about 340,000 in aggregate over five weeks, of which 120,000 were received in the final three days.

Additionally, the bank pointed to an “increase in complaints during the period, with an average of 5,000 a week during the first four weeks of August and an additional 22,000 during the final three days.”

The estimated additional cost is based on historical uphold rates, average redress and cost-to-do assumptions. The provisional figure reflects the unknown of how many of the information requests will convert into upheld complaints and the bank said it couldn’t determine that until it has processed more of the requests.

The additional provisional costs comprise £100m for complaints, information request processing costs of £100m and upheld complaint costs of £100 to £250m, based on a conversion rate of five per cent to 12 per cent.

CYBG said it expects to provide a more accurate estimate of the cost at its full-year results on 28 November.

The bank outlined how complaint costs were tracking broadly in line with assumptions as of 30 June. There was a slight increase during July, but it was not considered material.

In the Q3 trading update, the bank reported that it had seen a significant increase but at that point it was too early to say how many valid complaints would materialise.

CYBG bought Virgin Money last year.

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