Bulletin: Santander UK's Motor Finance Provision Indicates The Size Of U.K. Lenders' Potential Redress Payments

LONDON (S&P Global Ratings) Nov. 20, 2024--S&P Global Ratings said today that Santander UK PLC's £295 million provision in response to the Court of Appeal's recent ruling on motor finance commissions dented the bank's solid underlying third-quarter results. The provision illustrates the potential size of affected lenders' liabilities relating to the possible repayment of these commissions. The ultimate cost remains highly uncertain pending a potential appeal of the court ruling and the regulator's decision on the parameters of any customer redress scheme. We expect rated U.K. banks with material exposure to motor finance--FCE Bank PLC, Lloyds Banking Group PLC, Santander UK Group Holdings PLC, and to a lesser extent, Barclays PLC--to maintain solid capital positions despite the potential impact on

...November 20, 2024 LONDON (S&P Global Ratings) Nov. 20, 2024--S&P Global Ratings said today that Santander UK PLC's ú295 million provision in response to the Court of Appeal's recent ruling on motor finance commissions dented the bank's solid underlying third-quarter results. The provision illustrates the potential size of affected lenders' liabilities relating to the possible repayment of these commissions. The ultimate cost remains highly uncertain pending a potential appeal of the court ruling and the regulator's decision on the parameters of any customer redress scheme. We expect rated U.K. banks with material exposure to motor finance--FCE Bank PLC, Lloyds Banking Group PLC, Santander UK Group Holdings PLC, and to a lesser extent, Barclays PLC--to maintain solid capital positions despite the potential impact on earnings (see "Court's Motor Finance Judgment Gives Some U.K. Banks Pause In A Strong Third Quarter," published on Oct. 29, 2024). On Oct. 25, 2024, the Court of Appeal ruled...

Bulletin