Yorkshire Bank owner warns of UK challenges
NATIONAL Australia Bank, the owner of Yorkshire and Clydesdale Banks, has warned it will need to set aside a further £245m relating to the mis-selling of payment protection insurance and interest rate swaps by its UK operations.
In a third quarter statement it said £75m related to the increased costs of administering the PPI compensation programme and £170m is associated with the sale of interest rate hedging products.
The bank said the eventual bill could be higher, stressing there were a “wide range of uncertain factors relevant to determining the total costs”. A full assessment will be given in the annual figures.
Today, the bank also said a vote for Scottish independence would “give rise to significant additional costs and risks for Clydesdale”.
During the period NAB said revenue was down 1% due to lower markets income. This was partially offset by higher lending balances. Net profit remained steady at $1.7bn (£950m).
Chief executive Andrew Thorburn described the performance as “satisfactory”, and added: “Our UK operations still face a number of challenges. Conduct charges are difficult to predict, but we now expect that we will need to take further provisions at the full year result for both interest rate hedging products and Payment Protection Insurance (PPI).
“In addition, the Scottish Independence vote takes place on 18 September and a vote in favour of independence may give rise to significant additional costs and risks for Clydesdale Bank.”
Meanwhile, David Thorburn, chief executive of Clydesdale and Yorkshire Banks, said: “The quarter has seen us make good progress in moving the business forward. We have seen continued strong growth, well ahead of system, in our residential mortgage lending and deposit balances, and charges for bad and doubtful debts are down.
“We will also be taking further steps to increase our support for our customers. As one example, we will launch more services to help customers manage their money by delivering the enhancements to our Current Accounts we announced earlier in the year.
“There are many positives to see across the bank, however, in line with the industry, we continue to deal with legacy issues. The way we’ve handled historic PPI complaints has not been consistent, and we are committed to putting this right. We have already introduced a new PPI complaint handing process, and we will also apply this new process to a systematic and proactive review of all past PPI complaints.
“I am confident that the changes we have made, and continue to make, are taking us toward our goal of building a strong, customer focussed bank for the communities we serve.”
