Santander UK has announced a last-minute delay to its third-quarter results as it mulls the implications of last week’s Appeal Court ruling on motor finance loan commissions.
While the rest of the Spanish-owned group published numbers, the UK business said: “It is not practicable to reliably estimate at this point in time the extent of any potential financial impact.
“However, Santander UK Group Holdings plc is taking time to consider the judgment and the potential exposure it creates for the Santander UK Group.”
Lloyds Bank and Close Bros have already said the rulings in the three cases have raised the bar in terms of potential compensation for car loan mis-selling compensation.
Santander UK, alongside Lloyds and Barclays, are the high street banks said by City analysts to be most exposed to any claims for non-disclosure of loan commissions to customers.
That was the crux of last week’s legal judgments in the Appeal Court and went beyond an investigation into disclosure and commission already underway by the FCA according to Lloyds Banking Group PLC (LSE:LLOY), Close Bros and the regulator.
Completion of the FCA inquiry had already been pushed back once and analysts suggest it might now be delayed again.
Canadian bank RBC Capital estimates Santander is facing a bill of around £1.1 billion.
“Our understanding is that the bank needs additional time to make a legal comment on this issue, alongside third-quarter results, or risk being locked out of funding markets,” RBC’s equity analyst, Benjamin Toms, told the Guardian.
Lloyds has already made a provision of £450 million for potential payouts but estimates for its exposure have gone up to between £1.5 billion to £2 billion after Friday.
Barclays is estimated to be on the hook for £357 million while mid-tier merchant bank Close Bros has already sold its asset management arm to bolster its balance sheet ahead of any claims.
Shares in Lloyds fell 0.7% today to 55.7p, Barclays rose by 0.5% and Close Bros dropped 0.8% to 253p.