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LONDON - Close Brothers Group PLC announced Thursday it may need to significantly increase its existing £165 million provision following the Financial Conduct Authority’s consultation paper on motor finance commissions published October 7.
The UK specialist banking group stated that its initial assessment indicates the FCA’s proposed redress scheme, if implemented in its current form, would likely result in a "material increase" to its current provision. The company noted this assessment remains subject to ongoing review of the proposal and further analysis of potential impacts.
Despite the potential financial implications, Close Brothers emphasized its capital strength, reporting a Common Equity Tier 1 ratio of 13.8% as of July 31, 2025. On a pro-forma basis, accounting for the recently announced sale of Winterflood Securities, this ratio stands at 14.3%, which the company highlighted is "significantly above" its applicable requirement of 9.7%.
The Winterflood Securities sale is expected to boost the group’s CET1 capital ratio by approximately 55 basis points, with about 30 basis points recognized upon completion and a further 25 basis points anticipated later from reduced operational risk weighted assets.
Close Brothers employs approximately 3,000 people primarily in the United Kingdom and Ireland, and is listed on the London Stock Exchange as a constituent of the FTSE 250.
The company indicated it will provide additional updates to the market as appropriate, according to the press release statement.
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