Close Brothers is accelerating cost cutting measures to help narrow losses after setting aside an additional £30 million to cover mounting costs from the motor finance scandal. The banking group confirmed that its total provision for the car finance redress scheme has increased to £320 million, following the Financial Conduct Authority's recent move to outline compensation details for affected consumers.
Cost Savings and Job Cuts
In its latest update, the group stated it is set to exceed its £25 million target in annual savings 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 firm had previously announced in March that it would cut around 600 jobs—nearly a quarter of its 2,600-strong workforce—over the next 18 months across its UK and Ireland teams as part of a cost-saving overhaul.
These cuts are expected to come from outsourcing and offshoring work, reducing its office network, and rolling out artificial intelligence “at pace.” Despite ramping up savings in 2026, Close Brothers confirmed that no additional job cuts are planned beyond the 600 already announced.
Progress on Initiatives
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.”
Financial Performance
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. However, this marked an improvement compared to the £102.2 million loss reported a year earlier. In its update for the third quarter to April 30, Close Brothers said its loan book increased by 1% to £9.3 billion.
Shares in the firm fell 3% in early trading on Thursday.
CEO Statement
Mike Morgan, chief executive of Close Brothers, commented: “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.”
