CYBG increases PPI provisions by over £400m
CYBG has increased its PPI provisions by £403m and is required to fund nearly 10 percent of this cost under terms agreed with NAB.
National Australia Bank (NAB) previously acquired both Clydesdale Bank and Yorkshire Bank before merging them together to form CYBG. It later decided to demerge CYBG from NAB which was completed in 2016.
This week, NAB published its accounts for the 12 months ending September 30 2017. It found CYBG has increased its provisions for legacy conduct costs by £403m.
These costs primarily relate to finalising CYBG’s remaining PPI cases as well as the estimated PPI claims yet to be made between now and August 2019.
These cost provisions have been made in connection with the conduct indemnity deed between CYBG and NAB, which was a condition of its demerger with NAB.
Under the terms of the deed, CYBG is required to fund 9.7 percent of the provision increase. As a result, CYBG will recognise a further charge of £39m in its income statement for the 12-month period ending September 30 2017, with the balance being funded by NAB.
Up until this point, CYBG has set aside £671m for legacy conduct matters, a sum that remains un-utilised. CYBG said this amount is sufficient to cover costs to deal with legacy conduct matters.
Further details will be provided when CYBG announces its full year results on November 21.