National Australia Bank sets aside £420m over PPI costs forcing it to issue profit warning
The Australian owner of Clydesdale and Yorkshire banks has put aside £670m to cover misconduct costs including PPI repayments, as the legacy of the mis-selling scandal continues to drag on.
National Australia Bank (NAB), which bought the two British lenders more than two decades ago, was forced to issue a profits warning amid the disclosure, raising the prospect that its new chief executive will attempt to sell the businesses.
The company said it would set aside £420m for PPI redress this year - more than doubling the amount it had earmarked to date - as it said Clydesdale and Yorkshire would have to dig into records dating back before 2000 and deal with a barrage of new complaints. At the same time, it took a £250m charge for compensation related to mis-selling interest rate hedging products.
Andrew Thornburn, who took over at NAB in August, said it was "disappointing" to have to set the money aside. He said the decision "gives us more clarity going into the future and allows us to focus on the core Australian and New Zealand franchises", comments which were seized upon as an indication that the new boss may be gearing up for a sale of the UK banks.
During an investor call on Thursday, he said he would provide more detail on their future when NAB delivers full-year results at the end of the month.
Clydesdale and Yorkshire have dragged on the wider group in recent years, with the crisis-hit UK economy faring much worse than those of Australia and New Zealand, and the prospect of new issues emerging has blighted an attempted sale.
Analysts speculated that the significant write-downs announced by NAB's new boss could be an attempt to clear the decks in anticipation of a disposal.
The provisions more than double Clydesdale and Yorkshire’s anticipated PPI costs, with the total set aside to date being £386m. NAB bought Clydesdale in 1987 and Yorkshire Bank three years later.
The Australian company said the provisions, made alongside others related to software impairments and tax – would mean full-year profits of between A$5.1bn and A$5.2bn (£2.8bn) – 14pc lower than market expectations.Author: James Titcomb
Source: The telegraph.co.uk