Close Brothers is about to shed 600 full-time jobs by the end of 2027. That’s one-fifth of its entire workforce. The FTSE 250 bank is trying to salvage what’s left of its reputation after the motor finance scandal spiralled into an estimated £300m black hole. Spoiler alert: it’s not going well. Here’s the thing about banking scandals — they’re expensive. And when regulators circle, cost-cutting becomes the only option left standing.
The £300m Motor Finance Disaster
Close Brothers’ car finance arm has become a cautionary tale. The bank has now set aside £300m to cover redress costs linked to motor finance misselling. In October 2025, they earmarked £135m following FCA proposals for industry-wide redress. But that wasn’t enough.
Short-seller Viceroy Research threw a grenade into the mix, publishing a bombshell report claiming Close Brothers had ‘systematically misrepresented’ its motor finance exposure. They warned the bank would need to at least double its existing provisions. Worse still, Viceroy suggested the firm could face regulatory intervention, with shareholders left ‘substantially wiped out’ in a worst-case scenario.
The H1 results tell the story. Close Brothers reported a £65.5m loss for the first half of the current year — better than the £102.2m loss in the same period last year, but losses all the same. Operating income tumbled to £333.8m from £355.4m. The bank’s top line is shrinking.
Cost Cuts: The Only Game in Town
So what’s the response? Slash costs by £85m, axe 600 jobs, and hope the FCA gives you a break.
Close Brothers CEO Mike Morgan framed it as part of the bank’s ‘simplify, optimise, and grow’ strategy. Translation: they’re already simple (done), now they’re focused on squeezing every penny out of the business, and growth can wait.
The cost-cutting programme is real. Operating expenses fell to £359.8m in H1 from £409.5m a year earlier. That’s progress. But it’s not enough to offset the regulatory pain, and it certainly doesn’t look great for the 600 people being shown the door.
Watch This Space: The Dividend Question
Here’s what shareholders are really worried about: dividends are off the table until the FCA provides clarity on the full scope of the motor finance redress scheme.
That’s banker-speak for ‘we don’t know how much more we’re going to have to pay, so we’re keeping the cash under the mattress.’ When a FTSE 250 bank suspends its dividend, the market takes notice. It signals genuine uncertainty about the bank’s capacity to return cash to shareholders in the foreseeable future.
The regulatory path ahead remains murky. Close Brothers is trying to get ahead of the pain with aggressive cost cuts and transparency, but until the FCA draws a line under motor finance redress, expect more bad headlines.
The Bottom Line
Close Brothers is paying a heavy price for motor finance misselling. A £300m provision, 600 job cuts, and no dividend in sight. The bank is fighting to stabilise, but the road ahead is long. Watch this space.
FAQ
Why is Close Brothers cutting 600 jobs?
The bank is trying to reduce costs by £85m as it grapples with a £300m motor finance scandal. Cost-cutting is the primary tool left when regulatory fines and redress obligations spiral.
How much has Close Brothers set aside for motor finance redress?
£300m total, with £135m earmarked in October 2025 following FCA proposals. Short-seller Viceroy warned the bank may need to double this figure, but the final number depends on the FCA’s industry-wide redress scheme.
Is Close Brothers dividends returning soon?
No. The bank has suspended dividends until the FCA provides clarity on the full scope of motor finance redress. This could take months or even years to resolve.
What’s the short-seller Viceroy claiming?
Viceroy accused Close Brothers of ‘systematically misrepresenting’ its motor finance exposure and warned the bank could need regulatory intervention, with shareholders potentially wiped out in a worst-case scenario.
Will Close Brothers recover?
The bank is taking action — cutting costs, reducing exposure, and staying transparent with regulators. But the motor finance scandal will cast a shadow for years. Recovery depends on regulatory clarity and market confidence returning.
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Effective Date: 15th July 2025
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