Partner Article

NAB’s mis-selling bill for IRHPs ‘could be north of £1 billion’

National Australia Bank, parent company of Clydesdale Bank and Yorkshire Bank, may be underestimating the amount of money it needs to set aside to compensate victims of mis-selling.

The bank is seeing the reprecussions of mis-selling Tailored Business Loans (TBLs) and standalone Interest Rate Hedging Products (IRHPs).

Clydesdale’s potential exposure has been analysed Leeds-based All Square business bank claims specialists, which estimates that the £250 million recently set aside to cover conduct risk relating to TBL and interest rate hedging product mis-selling could be inadequate.

Daniel Hall, managing director said: “All Square has made its own estimation of the potential mis-selling bill between £1.0-1.5bn, which could represent a gap compared to the current levels provided for.

“We analysed the potential mis-selling bill based on a number of scenarios and calculated a range from £1-£1.5 billion for direct product losses. If you include consequential losses, then this figure could be higher”.

In its full year results published today, National Australia Bank indicated a firm intention to sell the UK bank, signalling that it is an “absolute priority”.

Andrew Thorburn, chief executive reported; “While our Australia and New Zealand franchises are in good shape, it is disappointing to record a full year results that included $1.5 billion after tax in UK conduct provisions and other impairments”

Daniel Hall added: “With just over 500 complaints received by Clydesdale relating to Fixed Rate Tailored Business Loans over 13 years, we expect the number of complaints to increase over the coming months as awareness of this latest mis-selling issue grows”.

This was posted in Bdaily's Members' News section by Clare Burnett .