Clydesdale takes another £500m hit over misselling

The news comes just months after Clydesdale was fined £20.7 million by the Financial Conduct Authority for serious failings in PPI complaint handling in April and as National Australia Bank is in the midst of demerging and floating Clydesdale, which includes the Yorkshire Bank.

In March NAB was ordered to set aside £1.7 billion by the Prudential Regulation Authority for “legacy conduct costs” to cover the demerger and flotation.

The additional provision announced today will be taken from that fund and on top of more than £800 million already set aside.

NAB said between £350m and £500m more would be set aside this year, but added that the final cost remained uncertain.

The new provisions do not include anything to cover the latest potential costs of PPI based on a Supreme Court ruling over the level of commision charged by providers of the controversial payment protection cover. The FCA is due to rule shortly on the test case and if it were to apply that ruling across the board banks could face billions of pounds of extra compensation claims.

Clydesdale said it would provide a final figure for the new provisions with its full year figures for the year to September. At the same time it will give details of the demerger and IPO on which it said it had made “substantial progress” in the third quarter and which is slated to take place before the end of the year.

NAB made the announcement in its third quarter results which also included a statement that said it intends to complete the Clydesdale break-up by the end of this year.

NAB said “substantial progress” had been made on the demerger and stock market sale. It will provide more detail with full-year results in late October.

The Australian banking group has been working hard to offload the Clydesdale, which, as well as being hammered by the costs of misselling, has amassed a large portfolio of bad property loans.