Close Brothers to strengthen finances by £400m as FCA review continues

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Close Brothers will introduce additional measures to strengthen the group’s available capital by around £400 million in response to the Financial Conduct Authority (FCA) motor finance review.

A risk transfer of assets, selective loan book growth to optimise risk weighted assets, additional cost management initiatives and the retention of earnings are options while other potential management actions are being explored.

Adrian Sainsbury, chief executive of Close Brothers, said: “The FCA’s review of the motor finance industry is ongoing and it would be premature to predict the outcome or estimate the potential impact on the group.

“The Board however recognises the paramount importance of preparing the group for a range of outcomes from this review. As part of this, the Board is taking a number of decisive actions to strengthen our capital position materially.

“These include the difficult decision taken last month not to pay dividends in respect of the current financial year. In addition, we are taking steps to optimise our risk weighted assets and reduce costs.”

Previously, Close Brothers scrapped its dividends for shareholders as it awaited the outcome of the FCA review.

Sainsbury added: “While we are working through a current period of uncertainty, the Board is taking decisive actions and is confident that the group will emerge well positioned to take advantage of future opportunities.”

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