Close Brothers plunges as short seller claims it understated car finance risks

March 17, 2026 - 04:47

Shares in Close Brothers Group suffered a dramatic fall, dropping as much as 14% in a single trading session. The sharp decline was triggered by a report from short-selling firm Viceroy Research, which alleges the merchant bank has significantly understated its exposure to risks within its car finance division.

Viceroy's analysis contends that Close Brothers could face a severe financial hit from the ongoing regulatory review into historical motor finance commission arrangements. The short seller claims the lender may be forced to substantially increase its provisions for potential customer redress, with estimates soaring to as much as £1.23 billion. This figure far exceeds the £400 million the market has previously anticipated, suggesting a potential capital shortfall.

The report has ignited intense investor concern, casting a shadow over the stability of the bank's loan book. The significant share price movement reflects deep market anxiety about the potential for hefty new provisions that could impact profitability and capital reserves. The company now faces mounting pressure to address these claims directly and provide clarity to shareholders regarding its true exposure to the sector-wide investigation. Trading in the stock remains volatile as the market digests the serious allegations.