British bank led by ex-AIB boss in PPI spiral

Shares in Clydesdale Bank, the British lender led by former AIB chief executive David Duffy, tumbled more than 20% after it made a fresh £300m-£450m (€335m-€500m) provision to settle mis-selling claims linked to the country’s most expensive consumer banking scandal.

The lender also owns the Yorkshire and Virgin Money brands, and said it had received an “unprecedented volume” of complaints from customers seeking compensation for mis-sold payment protection insurance (PPI) before a claims deadline on August 29.

During August alone, Clydesdale said it had received more than eight months’ worth of information requests, with 340,000 in aggregate over five weeks. Some 120,000 complaints were received in the three days before the deadline.

Analysts said the additional provision could put Clydesdale’s future dividends at risk.

“Given management’s credibility is challenged on PPI, investors are likely to avoid this share until results on November 28,” Jefferies analysts said in a client note.

Potential capital distributions are likely off the table for full-year 2019.

Clydesdale did not immediately respond to a request for comment, on the threat to its capital distribution plans but said in a statement that the charges would still leave its key capital ratios above regulatory requirements.

Reuters and Irish Examiner