Source: Sharecast
RBC said it was surprised permission for judicial review had been granted, arguing the FCA faced an "impossible task" in designing a scheme acceptable to all parties. It noted the final framework was already slightly more onerous than envisaged by the Supreme Court, and that the Tribunal's decision added further complexity and delay.
The Canadian bank pointed out that the case was now pencilled in for December 2026 or February 2027, pushing the timeline back by at least three months. The FCA still expects payments to begin in 2027 if the current scheme is upheld, but RBC noted it was unclear what the regulator would do if the scheme were overturned - with options ranging from modifying the framework to scrapping it entirely and reverting to a complaints‑led process.
The FCA has estimated that abandoning the scheme could add around £6.3bn in administrative costs for lenders, with RBC calculating Close Brothers' share at roughly £200m.
RBC said Close Brothers may need to consider whether its current £320m provision remains adequate, though it expects no change for now, and added that ongoing uncertainty would likely prevent the bank from declaring a FY26 dividend, removing its previous 5p forecast.
The broker, which also also cut its price target on the stock from 625p to 470p, said Close Brothers was now expected to deliver the lowest value creation across 50 European banks over the next three years, and warned the shares "could drift from here".
Reporting by Iain Gilbert at Sharecast.com