CYBG PLC's shares slumped Sept. 5 after the bank disclosed it will take more provisions to cover mis-sold payment protection insurance, or PPI, claims.
The bank's shares were trading 21% lower as of 11 a.m. London time, a day after it announced that it expects to book additional costs in the range of £300 million to £450 million as PPI information requests and complaints spiked days before the Aug. 29 deadline to seek redress. CYBG had previously set aside £2.6 billion for PPI mis-selling provisions.
In August, CYBG received around 340,000 information requests, more than what it got in the previous eight months combined. Of the number of requests, 120,000 were sent in the final three days. The bank also got an average of about 5,000 complaints per week in the first four weeks of the month and 22,000 more in the three days before the deadline. CYBG said it expects to provide a more accurate estimate for the costs it incurred over the scandal when it presents its results for the 2019 fiscal year on Nov. 28.
Analysts had earlier projected that CYBG would take a £100 million provision in its 2019 fiscal year results over the matter.
Had the provisions been recognized in the bank's financial statements for the period ended June 30, it would have resulted in a proforma reduction of between 130 basis points to 190 basis points on its common equity Tier 1 ratio, it noted.
The initial estimate follows a similar announcement from Royal Bank of Scotland Group PLC, which expects to book an additional charge of between £600 million and £900 million in the third quarter to settle claims.
