"The restructuring, confirmed by chief executive Mike Morgan, will reduce headcount to approximately 2,000 over the next 21 months and is intended to restore investor confidence following renewed scrutiny of the group's potential compensation liabilities."
"The lender is widely regarded as one of the most exposed UK financial institutions to the car finance scandal relative to its size, with motor loans accounting for around £2 billion of its £9.5 billion loan book."
"The scandal, which first emerged two years ago, centres on the failure of lenders to adequately disclose commission arrangements paid to car dealers for arranging finance. The Financial Conduct Authority is expected to set out its final redress scheme imminently, with earlier estimates suggesting the total industry bill could reach £11 billion."
Close Brothers announced plans to eliminate approximately 600 positions, reducing its workforce to around 2,000 over the next 21 months. This restructuring aims to restore investor confidence following renewed scrutiny of the lender's compensation liabilities related to the motor finance mis-selling scandal. Short-seller Viceroy Research claimed potential compensation could reach £1.23 billion, significantly exceeding Close Brothers' current £300 million provision. Motor loans represent approximately £2 billion of the company's £9.5 billion loan book, making it highly exposed to the scandal. The Financial Conduct Authority is expected to announce its final redress scheme soon, with industry-wide compensation estimates potentially reaching £11 billion. Chief executive Mike Morgan defended the bank's £300 million provision as probability-weighted and compliant with accounting standards.
Read at Business Matters
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