THE owner of Clydesdale Bank saw around £160 million wiped off its stock market worth as CYBG reported an interim loss of £95m, with its results weighed by further provision for the mis-selling of payment protection insurance (PPI).

Shares in the Glasgow-based bank, which made a £46m profit in the first half of last year, dropped by nearly six per cent after the institution admitted “walk-in” complaint volumes over PPI have been “running much higher than both we and the industry expected”.

The City’s response to the results lowered the value of CYBG’s all-share takeover approach for Virgin Money. Last week’s approach valued Virgin, which said it was reviewing the proposed merger, at £1.6 billion. CYBG made no further comment on the approach yesterday.

The bank increased its provision for legacy PPI costs by £350m during the first half. That meant it utilised the remaining £158m available under its conduct indemnity deed with National Australia Bank, which kicked in following CYBG’s separation from its former owner when it floated two years ago.

CYGB has now booked nearly £2.5 billion of PPI charges since the scandal erupted.

The level of PPI claims spiked across the industry following the launch of an advertising campaign, featuring the disembodied “head” of Arnold Schwarzenegger, last August. The increase led CYBG to revise its estimate of walk-in complaints to 110,000 for the period between April this year and the time bar of August 2019. The £350m of extra provisions it announced in April also covers the cost of closing the bank’s own remediation programme. It noted that some cases covered by its own programme are complex.

Despite the extra provision, CYBG chief operating officer Debbie Crosbie declared the bank was moving towards the end game on PPI.

Ms Crosbie said: “I think every bank has had its difficulty in predicting the level of people who are still going to complain. One of the things that is positive is that we have now behind us all of our past review of complaints. This is now only about walk-in complaints.”

She added: “The end is in sight here, with August 2019 fast approaching.”

Away from PPI, there was an £18m rise in provisions for other legacy conduct charges. Asked to elaborate on the charges, Ms Crosbie said they related to a “range of historical issues, most of them very small.” She noted: “We have a number items where we’ve spent significant time and effort putting things right for customers, but there continues to be a trail of customers who we settle with on an ongoing basis.

“In particular, we have been reviewing some of our past investment sales. They are very historic, and that really is the bulk of what you are seeing coming through now.”

Ms Crosbie described the bank’s interim results as “solid”, highlighting that underlying profit before tax had climbed by 28% to £158millon. She pointed to mortgage growth of 6%, a 7% reduction in costs and a £161m or 5% rise in core SME lending, putting it on target to achieve its £6bn lending pledge for the three years to 2019. The bank reported annualised deposit growth of 5% to £28.4bn, although the net interest margin (NIM) achieved fell to 2.18% in the six months to March 31, compared with 2.26% last year.

“All in all, it’s really solid performance and hopefully gives people confidence that we are continuing to deliver on our promises,” Ms Crosbie added.

Separately, the bank revealed plans to move to a new head office on Glasgow’s Bothwell Street. The institution has signed a lease on an office building on Bothwell Street which has still to be constructed. The bank has pledged to take a “significant” part of the new building, schedule to open in 2023, and noted that the space it occupies will be purpose built to the needs of its staff.

Ms Crosbie said the investment, which will result in CYBG combining its three sites into one in Glasgow, is a “great story” for the city and Scotland.

Shares in CYBG closed down 18.2p, or 5.63%, at 305p.