SHARES in Clydesdale Bank owner CYBG have plunged to a fresh low after investors reacted to a massive extra provision taken by the bank in anticipation of a surge in claims for payment protection insurance (PPI) mis-selling.

Nearly £430 million was wiped from the bank’s stock market worth after it said it had hiked its provisions for “legacy PPI costs” by up to £450 million.

Shares plunged by 21.4% to 110p, leaving the price well adrift of its 364.2p peak reached on August 8 last year. CYBG, which recently merged with Virgin Money, floated in February 2016 following its demerger from National Australia Bank.

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Its move to increase its PPI provisions comes after a host of mainstream banks faced a deluge of information requests ahead of the final claims deadline of August 29 imposed by the Financial Conduct Authority (FCA).

CYBG said it received an “unprecedented volume” of information requests in August, with more than eight months’ worth of requests received in a single month. It received around 340,000 requests in aggregate over a five-week spell, with around 120,000 arriving in the final three days before August 29.

The update was announced after the stock market closed on Wednesday evening, and came after the bank had earlier in the day said it expected the cost of claims received since July 31 to be material. In its statement of Wednesday evening, the bank said it had received a “sustained increase in complaints”, with an average of around 5,000 per week in the first four weeks of August. An additional 22,000 complaints were submitted in the final three days, the bank said.

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CYBG signalled it was not yet able to precisely quantify what the total PPI bill will be with regard to the late surge in information requests.

Based on historical assumptions, and an information request complaint conversion rate of 5% to 12%, it has made a provisional PPI cost estimate of £300m to £450m.

In said in a statement: “The group will now focus on working through the significant volume of information requests received and expects to be in a position to provide a more accurate estimate of the costs at its full year results on 28 November 2019.

“The final outcome could be above or below the estimated range above.”

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PPI provision dragged CYBG into the red in its most recent full-year accounts. The bank reported a statutory loss of £145m in the year ended September 30, 2018, after making total provisions of £352m for PPI. CYBG had provided a total of £2.67bn for PPI claims and associated administration costs as at the end of its first half on March 31 this year.

It is not the only bank to have significantly upped its PPI provisions recently.

On Wednesday, Royal Bank of Scotland said it expected to provide up to a further £900m in respect of PPI claims in its third-quarter results.

The bank, which is 62 per cent owned by the UK Government, had since the scandal first erupted made PPI provisions totalling £5.3bn by June 30.

Edinburgh-based Royal said on Wednesday: “The volume of claims received during August was significantly higher than expected, with a further spike in the final days leading up to the deadline.”

Lloyds Banking Group, owner of Bank of Scotland, announced on July 31 that it had set aside a further £550m for PPI claims in the second quarter after a surge in information requests ahead of the claims deadline.

Lloyds has paid out more in PPI compensation than any other major UK bank, with its most-recent provision taking its total bill to in excess of £20bn.

UK lenders had paid out a total of £36bn to claimants by the end of June this year.