Close Brothers shares surge after UK bank says it can ‘comfortably absorb’ cost of car finance compensation

Specialist lender says it expects its slice of £9.1bn compensation set by FCA to be about £320m Close Brothers shares surged on Wednesday after the UK bank declared it could “comfortably absorb” its slice of a £9.1bn compensation bill over the motor finance scandal, hours after one of its rivals announced it was selling its UK operations over looming costs. The specialist lender said it expected the final terms of the Financial Conduct Authority’s (FCA) compensation scheme to cost roughly £320m, a sum that was “broadly similar” to previous estimates and the £294m put aside to date. Close Brothers said the extra £26m could be “comfortably absorbed by existing capital resources, leaving the group well positioned to continue delivering its strategy”. The news sent its shares up by 17% by early afternoon on Wednesday. The FCA’s compensation scheme, which was finalised last week, is intended to draw a line under the car finance scandal, in which drivers were overcharged for loans as a result of commission payments between lenders and car dealers. It estimated that victims will be in line for payouts worth £830 on average. The bank’s market update allayed fears a