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I’ve always felt a Yankee raider will sweep in and take CBG out once uncertainty is taken out of the equation.

Based on nothing more than a hunch that it’s a great brand and great business that would add to and complement any fin services portfolio; and the yanks are still awash with cash (ish).

I tried putting your response into ChatGPT but it said it had a headache.

150 year old financial institutions don’t tend to take these sorts of actions; what they tend to do is the sort of actions I saw being detailed and executed in this weeks results report.

They may need to make extra provision. Shock, horror. But it will remove the uncertainty and once the noise dies down; happy days.

Personally I think a deal will be reached allowing all to move on and avoid JR. Yes the law is sacrosanct, but commerciality, practicality and politics win hands down

Right, let’s cut through the noise on Viceroy, because they’re not some random outfit — but they’re also not saints.

Who they are

Viceroy Research is a short-selling research firm.

That means:

• they take short positions (bet the share price will fall)

• then publish critical reports to support that thesis

They make money if the share price drops. Simple as that.

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Their playbook (very consistent)

They tend to follow a pattern:

1. Identify a company they believe is overvalued / misrepresenting something

2. Build a report using:

• public filings

• regulatory documents

• industry comparisons

3. Publish something very punchy and bearish

4. Market reacts → price drops → they profit

Timing is rarely accidental. It’s usually:

• ahead of results

• during uncertainty

• or when liquidity is thin (sound familiar…)

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Track record (mixed, depending who you ask)

They’ve gone after a number of companies globally:

• Steinhoff International

→ one of the big wins (though multiple parties exposed that)

• Capitec Bank

→ accused it of reckless lending → stock dropped sharply

→ company hit back hard → recovered strongly

→ Viceroy widely criticised here

• Grenke AG

→ allegations of irregularities → major volatility → later partially substantiated, but not to the extreme claimed

So:

• sometimes they’re early and right

• sometimes they’re early and overcook it massively

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The important bit (people miss this)

They are not neutral analysts.

They are:

• financially incentivised

• deliberately provocative

• often worst-case scenario driven

Their reports are designed to:

maximise attention, fear, and price reaction

That doesn’t mean they’re wrong.

But it does mean you should read them as:

“the most bearish plausible version of reality”

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How that applies to CBG

Their CBG piece is classic Viceroy:

• assumes very high take-up

• assumes high cost per claim

• leans into court outcomes over FCA scheme

• pushes CET1 stress to breaking point

It’s a stacked downside case, not a balanced one.

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My blunt view

Viceroy aren’t:

• fraudsters by default

• nor truth-tellers by default

They’re traders with a narrative.

Sometimes they expose real problems.

Sometimes they create temporary dislocations.

It’s a bulletin board. People discuss the stock – that includes frustration when a short seller drops a report and wipes 15–20% off the price in a few hours. Calling that “bleating” feels a bit rich.

The suggestion that the FCA should suspend Viceroy also misunderstands how markets work. Short sellers are allowed to publish research provided they disclose their position and use public information. Being aggressively negative – or even completely wrong – isn’t illegal.

What matters is the substance.

Nothing in yesterday’s report changed the facts:

• CBG has £300m provisioned, which management still describe as their best estimate

• CET1 is 14.3% vs a 9.7% requirement

• the final FCA scheme hasn’t even been published yet

Viceroy’s report is essentially a set of assumptions built on the FCA consultation paper and a very bearish interpretation of take-up, cost per claim and legal outcomes. That’s their view. Investors can decide whether they believe it.

But presenting it as some sort of regulatory or existential event doesn’t really stack up when the company has just reiterated its capital position and when the legal framework itself is still being debated between the industry and the FCA.

Some of the more analytical posters here have been looking at the legal alignment with the Supreme Court ruling, the CET1 buffer and the scheme mechanics, which is where the real debate should sit.

Everything else is just noise.

Archie Norman ‘kitchen sinked’ the balance sheet at both Asda and M&S, always seemed like a sound strategy to me; if it were your home you’d call it de-cluttering.

Unfortunate for those affected re headcount reduction but these days I’m not sure that’s a sign of poor growth, more about efficiency and tech imo

Hey bigpunt - you’re right and I’m now a seller after your post - thanks for the heads up it restores my faith in humanity

‘Or lower’

‘and remains subject to further clarity from the FCA on the scope and design of any redress scheme and any further legal, regulatory or industry developments.”

The 5 things that matter in these results

1️⃣ CET1 is stronger, not weaker

The big number:

CET1 = 14.3% (up from 13.8%)

That is the opposite of what the Viceroy report implied. Their thesis was essentially:

additional provisions → CET1 collapse → regulatory breach risk

Instead we got:

• CET1 improving

• comfortably above the 9.7% regulatory requirement

• still above their 12–13% target range

That alone undermines the “capital crisis” narrative

2️⃣ No new motor finance provision

This is huge. They already took:

£300m total provision

• £165m earlier

• £135m added October 2025

The results did not increase it further.

If management believed the liability was suddenly £1bn+ as Viceroy suggests, they would have been forced to provision more today.

They didn’t.

3️⃣ The underlying business is still profitable

Adjusted operating profit:

£65.2m

Down from £80.5m but still solid.

Key metrics:

• NIM 7.1%

• Bad debt ratio 0.8% (very low)

• cost discipline holding

In other words:

The core bank is functioning normally.

4️⃣ The loss is purely accounting noise

Statutory loss:

£65.5m

But that is driven by the motor finance provision.

Strip that out and the business is profitable.

This is exactly the PPI-style accounting distortion banks went through before.

5️⃣ Management’s language is confident

This sentence is deliberate:

“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.”

That is effectively saying:

Even if the scheme moves, we have headroom.

Where the risks still are

To be balanced:

1️⃣ FCA scheme not final yet

2️⃣ Additional provisions still possible

3️⃣ Dividends still suspended

So the uncertainty is not gone.

But the catastrophic scenario looks less plausible after these numbers.

My honest interpretation

These results are quietly bullish relative to the fear yesterday.

Why?

Because if the Viceroy thesis had substance today was the moment it would have shown up in the numbers.

Instead we got:

• stronger capital

• stable provisioning

• functioning core bank

The real question now

The market will decide whether yesterday’s drop was:

A) short-seller induced panic

or

B) the start of a longer re-rating

Meanwhile, Close Brothers shares dropped 14% after infamous shortseller Viceroy Research claimed the financial services firm had “systematically misrepresented” its exposure to the motor finance scandal and will have to "at least" double its current provisions.

Chat fwiw:

This Viceroy report looks far more like a smash-and-grab short attack than serious analysis.

They’re short the stock and then build a model designed to produce the biggest possible liability. The headline £572m–£1.23bn number relies on stacking aggressive assumptions:

• 93% DCA exposure based largely on a Martin Lewis survey proxy

• Up to 100% claim participation, vs the FCA’s own ~85% central estimate

• £1,100+ per loan compensation, assuming a heavy mix of high-commission breaches

If you stack the most negative assumptions together you obviously get a huge number — but that’s not analysis, that’s scenario engineering.

The leap from that to “equity holders substantially wiped out” is frankly absurd when:

• CBG’s CET1 is ~13–14%, vs a 9.7% regulatory minimum

• The £300m provision has been audited and stress-tested

• CBG debt isn’t trading like a bank facing collapse

Could provisions rise? Of course. But presenting the most extreme outcome as the base case is exactly how activist short reports work.

This reads less like a balanced piece of research and more like a hit piece timed ahead of results to scare the market.

1️⃣ Who Viceroy are

Viceroy Research is known for publishing aggressive short reports on companies they are betting against.

Their model:

1. Take a short position

2. Publish a very critical report

3. Hope the market reacts

4. Profit if the share price drops

They’ve done this before with several companies globally.

So the incentive structure matters.

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2️⃣ Why the market reacted sharply

A 17% drop is not unusual when a short report lands.

Especially in a situation stock like

Close Brothers Group where:

• regulatory risk already exists

• investors are nervous before the FCA scheme announcement

• liquidity in the stock is not huge

So the market reaction is basically:

“Let’s price in the worst case until we know whether this report is credible.”

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3️⃣ The core claim they are making

Their argument appears to be:

• CBG has underestimated exposure to the FCA motor finance redress scheme.

• Provisions may need to double.

• CET1 capital could be pressured.

• Equity holders could face restructuring risk.

That is an extreme downside scenario.

For that to happen several things would need to be true simultaneously:

1. FCA scheme far larger than expected

2. CBG’s exposure materially larger than disclosed

3. Capital buffers insufficient

4. No ability to raise capital or restructure

That’s a stack of assumptions, not a single fact.

Great day at the Cheltenham Gold Cup and great to see so much Close Brothers’ branding as ever.

I’m in this share as I fully expect it to mirror the share price trajectory of another Cheltenham sponsor as they left uncertainty behind…….St. James Place

GLA, this is one hell of a ride and we deserve the win

NiharRoy - just how hard was it for you to NOT blame the crisis on the CBG Board?

Just joking. Sit tight.

Chat fwiw re ‘should we proceed’ framing:

“If we proceed with a scheme…”

At first glance it sounds like a normal regulatory disclaimer. But regulators choose wording very carefully in these communications.

There are three possible reasons they used that phrasing.

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1️⃣ Legal positioning (most likely)

Until the final rules are published, the Financial Conduct Authority cannot state definitively that the scheme will proceed.

Because:

• They are still reviewing 1,000+ consultation responses.

• Final rules must pass internal governance approval.

• They must demonstrate the consultation was genuine.

So legally they must say “if we proceed” rather than “when we proceed.”

This is standard regulatory drafting.

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2️⃣ Judicial review risk management

This wording also helps the FCA defend itself if lenders later challenge the scheme.

If the regulator appears to have pre-decided the outcome before considering consultation responses, courts can view the consultation as unlawful.

So they deliberately keep the language conditional.

That protects the FCA against a JR argument that the consultation was a sham.

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3️⃣ Political optionality (subtle but real)

It also leaves a small escape hatch.

If:

• The consultation responses show major problems

• Treasury pressure increases

• Legal advice says the scheme is vulnerable

…the FCA technically retains the option to:

• significantly narrow the scheme

• redesign it

• or theoretically abandon it

That probability is low — but the wording keeps the door open.

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What it doesn’t mean

It does not mean:

• The FCA is about to cancel the scheme.

• They are backing down entirely.

• The consultation might randomly end with no action.

They’ve invested too much regulatory capital in the process for that.

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What it does signal

The FCA is trying to show:

• the consultation is genuine

• the final scheme is still being shaped

• they are aware of the legal sensitivity

And importantly, they keep repeating:

“proportionate”

“well-functioning market”

That’s the real signal.

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The key takeaway:

The sentence isn’t a hint of retreat.

It’s defensive legal drafting to protect the final scheme from being challenged for procedural unfairness.

The real signal in today’s statement is actually the implementation period and operational streamlining, which suggests they are trying to design a scheme the industry can realistically absorb.

An implementation period of only three months suggests a smaller, more targeted scheme……right?

‘Proportionate’ / ‘operationally manageable’ / ‘supporting a well functioning market’ also encouraging imo

The FCA have courted consumer champions like Martin Lewis during this process, seemingly positioning themselves as the consumers champion. Rathi certainly has.

If legal logic and stakeholder pressure means they’re going to have to ‘soften’ the scheme in the banks ‘favour’; then now is very definitely a good time to bury bad news.

It rained again here today, boy did I curse the CBG Board.

Those thumb screws beginning to pinch a bit are they Mr. Rathi?

Great insight and well done - thanks

How was it competing it this time of the year please? Weather / many people around? Would love to do, in fact will do, but I don’t fancy summer when it’s packed