The bill is expected to deepen the firm’s multi-million-pound losses, which will significantly impact its expansion plans.

The lender, which was bought by Clydesdale and Yorkshire Banking Group (CYBG) last year, is expected to make a substantial final provision for the PPI scandal, which has cost the British banking industry a total of £50 billion so far.

It has been estimated by analysts that the PPI charges, alongside restructuring expenses from the acquisition of Virgin Money, will pull the bank into a £250 million loss for the year to the end of September.

Ian Gordon, Investec analyst, told The Times: “They will be reporting a material loss courtesy of the PPI charge. It screams out as a cheap bank now. The share price has fallen from 200p in July to 143.7p, largely thanks to a bleaker economic outlook, low-interest rates and PPI worries.”

CYBG has posted a £144m annual loss which was also due to PPI costs, this amount was posted before its takeover of Virgin Money.

The bank’s results will be a significant blow to chief executive David Duffy, who will reveal the first current account of Virgin Money within a few weeks.