Virgin Money Suspends Dividend on Mis-Selling Claims

(Bloomberg) -- Virgin Money U.K. Plc is suspending its dividend for the year after taking a hit tied to the long-running insurance mis-selling scandal that has plagued most British lenders.

“The board will reconsider dividends for full year 2020 in line with normal practice,” according to a Virgin Money earnings statement on Thursday. Virgin Money’s results were “significantly affected” by additional payment protection insurance provisions, driven by last minute claims in August, along with Virgin Money acquisition-related costs, it said. The lender’s shares surged as much as 25% after the PPI charge came at the lower end of estimates initially disclosed in September.

British lender CYBG Plc agreed to acquire U.K.’s Virgin Money in 2018 for about 1.7 billion pounds ($2.2 billion) and the combined companies were renamed under the Virgin Money brand. The newly formed lender set aside 385 million pounds in its fourth quarter for PPI.

An industry wide surge of complaints was sparked by the launch of an advertising campaign that starred an animatronic head of Arnold Schwarzenegger. PPI has been the most costly scandal to affect U.K. banks since the financial crisis, with lenders paying billions in compensation to customers who were wrongly sold the coverage.

Virgin Money booked a loss of 194 million pounds for the full-year ended Sept. 30, it said.

To contact the reporter on this story: Silla Brush in London at sbrush@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Shelley Robinson

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