Bank of Ireland revises motor finance redress costs to £350m

Core Viewpoint - The Bank of Ireland Group has increased its financial provision for compensating customers affected by motor finance agreements to approximately £350 million ($469.6 million) in response to the FCA's proposed compensation scheme [1][2]. Group 1: Financial Provision Adjustment - The revised provision reflects an increase from the previous estimate of £143 million, based on weighted scenarios and estimated costs related to the FCA redress scheme and potential legal proceedings [2]. - The group anticipates that the provision may increase significantly due to a higher number of eligible cases and the design of the redress methodology [3]. Group 2: Impact on Financial Reporting - The Bank of Ireland will incorporate any revisions into its financial reporting for the fiscal year ending in 2025, reflecting the final scheme and any additional relevant information [3]. - An increase in the provision to £350 million would impact the group's CET1 ratio, reducing it by about 35 basis points from 16.0% as of June 30, 2025 [4]. Group 3: Industry Context - Lloyds Banking Group has also responded to the car finance mis-selling issue, allocating an additional £800 million to its existing £1.15 billion provision, bringing the total to £1.95 billion [5].