UK Bank Weathers Car Finance Compensation, Shares Soar
Close Brothers, a specialist lender, sees its £320m compensation bill as manageable, as its shares surge after announcing it can 'comfortably absorb' the cost.
Close Brothers, a leading UK bank, has seen its shares surge after declaring it can comfortably absorb the cost of a £9.1 billion compensation scheme set by the Financial Conduct Authority (FCA) over the motor finance scandal. The bank estimates its share of the compensation will be around £320 million, a figure broadly similar to previous estimates and the £294 million it has already set aside.
The announcement comes just hours after one of Close Brothers' rivals announced it was selling its UK operations due to the looming costs associated with the compensation scheme. This development underscores the financial resilience of Close Brothers, which has managed to weather the storm and position itself as a stable player in the market.
The motor finance scandal, which involved the mis-selling of car loans to consumers, has been a major headache for the financial industry. The FCA's compensation scheme is designed to provide redress to those who were unfairly treated, with the total bill estimated at £9.1 billion.
In a statement, Close Brothers highlighted that the final terms of the compensation scheme are still to be determined, but the bank is confident it can handle the financial impact. Chief Executive Adrian Sainsbury commented,
Source: The Guardian
