Close Brothers to cut around 600 jobs; H1 losses narrow

(Sharecast News) - Close Brothers reported a narrowing of its first-half losses on Tuesday and said it was planning to cut around 600 jobs by the end of financial 2027 as it accelerates its cost-cutting programme. In the six months to 31 January, the operating loss before tax was £65.5m, an improvement on the £102.2 loss recorded for the same period a year earlier. Close Brothers said the lost mainly reflected the additional £135m motor finance provision taken in October 2025.

Adjusted operating profit fell 19% to £65.2m, while adjusted operating income was 6% lower at £326.6m as the loan book dipped 2% to £9.2bn, reflecting "the impact of current market conditions", in particular on the company's property book.

The CET1 capital ratio increased to 14.3% from 13.8%. This reflected completion of the sale of Winterflood and lower risk-weighted assets, partly offset by the increase in the motor finance commissions provision.

Close Brothers said it was accelerating its cost-cutting programme and now expects to deliver around £25m of annualised savings in the 2026 financial year, up from £20m previously, and around £60m by the end of 2027, previously 2028.

This is expected to result in a headcount reduction of about 600 full-time employees by the end of the 2027 financial year.

Chief executive Mike Morgan said: "In the first half of the 2026 financial year, the group delivered a resilient trading performance reflecting cost discipline, solid credit performance and a robust net interest margin. We have repositioned the business to focus on markets where we see strong and sustainable opportunities.

"As a result, and given current market conditions, the loan book has marginally reduced in the first half, while a number of our core businesses continued to grow. We are well positioned for future growth as a specialist banking group.

"Our CET1 capital ratio remains strong at 14.3% and we are confident that this leaves us well placed to absorb a range of potential outcomes from the FCA's proposed motor finance commission redress scheme."

At 0950 GMT, the shares were down 7% at 332.40p, having tumbled late on Monday after Viceroy Research said it has "systematically misrepresented" its exposure to the car finance scandal.

Viceroy said in a research note that examination of the Financial Conduct Authority's redress scheme suggests that Close Brothers will have to "at least, double its existing provisions".

The short-seller, famous for its exposes on Wirecard and Home Reit, said Close Brothers has not fully provisioned for the redress because further provisions would breach CET1 regulatory capital restrictions and could create "an equity wipeout event".

Viceroy said Close Brothers' redress exposure ranges from £572m to £1.2bn, which is well above its current provision of £300m.

The research firm's 'blue sky' outcome puts CBG at risk of regulatory intervention, while its base case indicates that equity-holders will be "substantially wiped out in a restructure".

Dan Coatsworth, head of markets at AJ Bell, said: "It was telling that the share price didn't recover any of yesterday's slump after Close Brothers denied the accusations were true, suggesting the market remains highly sceptical over the business until there is clarity on any compensation sums.

"Job cuts and guidance for higher than previously expected annual cost savings would normally be the right ingredients to drive a share price higher, but not in Close Brothers' case. The core business doesn't look strong enough to warrant investors taking the risk of buying in the face of considerable uncertainty."

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