𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Close Brothers is speeding up cost cutting to help narrow losses after setting aside another £30 million to cover mounting costs of the motor finance scandal.

The banking group confirmed its total provision for the car finance redress scheme increased to £320 million following the Financial Conduct Authority’s move last month to set out details of how impacted consumers will be compensated.

In its latest update, it said it was set to exceed its £25 million in annual savings earmarked for 2026, which means it is now on track for an operating loss for central functions at the lower end of its £45 million to £50 million guidance.

The group revealed in March it was cutting around 600 jobs – nearly a quarter of its 2,600-strong workforce – over the next 18 months across its teams in the UK and Ireland under the cost saving overhaul.

It said at the time the cuts would come from actions including moves to outsource and offshore work, trim its office network and roll out the use of artificial intelligence (AI) “at pace”.

It is not cutting more jobs on top of the 600 already announced despite ramping up savings in 2026, the firm confirmed.

Close Brothers said on Thursday: “We are making good progress on our initiatives to deliver cost reduction and optimise operational processes, including the simplification of business and management structures, and further outsourcing and offshoring.

“We now expect to exceed our target of around £25 million of annualised savings by the end of the 2026 financial year, as a result of accelerating cost actions into the current year.”

The firm recently reported pre-tax operating losses of £65.5 million for the six months to March 31 after provisions for the car loans mis-selling saga.

But this marked an improvement on the £102.2 million in losses reported a year earlier.

In its update for the third quarter to April 30, it said its loan book increased 1% to £9.3 billion.

Shares in the firm fell 3% in early trading on Thursday.

Mike Morgan, chief executive of Close Brothers, said: “We have delivered a solid performance in the third quarter and continue to execute our strategy through this important transitional year.

“We are progressing well with the delivery of our strategic objectives and targets.

“Our capital position remains strong after absorbing the additional provision for motor finance commissions, enabling investment in future growth to further support the UK economy.”