By Scott Wright

THE owner of Clydesdale Bank has put plans to change branch names to Virgin Money on hold as it made provision for higher losses on loans in light of the coronavirus pandemic, causing first-half profits to fall.

Virgin Money had been on schedule to phase out the Clydesdale Bank and Yorkshire Bank names by October under a process which would have seen further branch closures and redundancies. The changes are part of the integration of Virgin and former Clydesdale and Yorkshire owner CYBG, following their £1.9 billion merger announced in April 2018.

Around 500 roles were earmarked for redundancy in February as part of a continuing drive to save costs following the merger, which is ultimately forecast to result in a total of 1,500 job losses.

The bank said then it would close a further 22 branches and consolidate a further 30 as part of the continuing integration, putting 215 jobs at risk. Eleven branches in Scotland were to go.

But the bank has pushed back those plans into its next financial year to “maximise impact and defer associated costs”.

Responding to questions from journalists, Virgin Money chief executive David Duffy said the bank cannot yet provide details on timescale of the delay, noting that its current priority is to support customers through the coronavirus pandemic.

“I can’t give you any guidance on when we will proceed,” Mr Duffy said, adding that the bank had no plans to put any staff on furlough.

The delay was announced as Virgin became the latest major bank to make provision for losses on loans spiking because of the impact of coronavirus on the economy. It booked a higher impairment charge of £232 million for the six months to March 31, including provision of £146m for the impact of Covid-19.The charge dragged underlying profits lower to £120m from £286m for the same period one year earlier.

Asked if the bank’s provisions had taken into consideration the prospect of furlough payments ending for millions of people in June, chief financial officer Ian Smith said it had allowed for a sustained, high levels of unemployment for up to two years, and a “short sharp shock” in the short term.

Mr Duffy hailed response of the bank in rolling out government loan schemes and responding to demands for support from customers.

He said the bank has so far given retail customers 60,000 mortgage payment holidays 32,000 credit card payment holidays, and 8,000 personal loan payment holidays.

And he noted it has provided 4,500 of lending support facilities to business customers, including £135 million under the Coronavirus Business Interruption Loans Scheme (CBILS).

As of Tuesday night, the bank had received more than 5,600 applications for the small business “bounce back” loans scheme, releasing about £170m so far. Mr Duffy expects the bank will have dealt with all applications for bounce back loans to have been processed by the end of this week, having received 60% of applications in the first two days.

The bank does not currently intend to take applications for bounce back loans from non-customers. “Our priority has to be existing customers for volume reasons,” Mr Duffy said. “We have to do what we can for the customers we have.”

Asked by The Herald if the bank was now satisfied with the speed with which it was getting loans to customers, following criticism banks had not been processing CBILS applications quickly enough, Mr Duffy replied: “Absolutely.”

He acknowledged that the complexity involved in getting three brand new products set up in two weeks meant it took several days to get the schemes up and running, but said: “I’m extremely comfortable right now with the CBILS process and with all of the programmes working very well.

“Frankly, what we have seen is CBILS has dramatically reduced in volume. That, I think, means that all those who thought CBILS was the answer have certainly been serviced properly at this point.”

Mr Duffy said the executive team at Virgin has volunteered to not take bonuses this year “before this was a popular subject”, adding that he had also taken a pay cut equal to one-third of his salary for the next six months.

Mr Smith added that staff would continue to receive full pay for the next six months, emphasising that there were no plans to put any people on furlough.

Meanwhile, Mr Duffy said the bank is committed to using the Virgin name in spite of adverse publicity surrounding Sir Richard Branson’s bid for a government bailout for Virgin Atlantic. The bank pays about £11m to £12m a year in “revenue-related” licence fees to Sir Richard Branson.

Shares in Virgin Money close up 4.4%, or 3.12p, at 74.42p.