(Refiles to correct dropped word in second paragraph)

* No update on Virgin Money takeover bid

* CET1 ratio of 11.3 pct

* Bank expects capital windfall from regulatory change

By Emma Rumney and Lawrence White

LONDON, May 15 (Reuters) – Britain’s CYBG reported a loss of 76 million pounds ($102.96 million) for the first half of the year on Tuesday, but gave no update on its bid for Virgin Money.

The bank made a 1.6 billion pound takeover approach for the rival mid-sized bank in May, which it said would create one of Britain’s biggest lenders.

CYBG’s loss stemmed from a previously announced 350 million pound charge for the mis-selling of payment protection insurance (PPI), which Chief Executive officer David Duffy described as “disappointing”.

“While the economic outlook remains uncertain, CYBG is well-positioned to continue executing our existing strategy and to capture future growth opportunities,” he said in a statement.

CYBG reported the PPI hit in March after a media campaign by Britain’s financial watchdog boosted claims by customers against banks for Britain’s costliest-ever consumer scandal, in which people were mis-sold often worthless insurance products.

Duffy said that the “strong capital position” of the group meant that CYBG could absorb this hit without changing its future strategy or aspirations.

The bank reported a Tier I capital ratio of 11.3 percent, below the 12-13 percent range that it aspires to. Analysts expect the bank will draw on capital to fund some of its bid for Virgin Money, with CYBG expected to benefit from a capital windfall due to an expected change to risk models.

CYBG has until June 4 to either make a firm offer or walk away from its bid for Virgin Money, a move that sparked wider talk of consolidation among British mid-sized lenders when it was announced earlier in May. ($1 = 0.7382 pounds) (Reporting by Emma Rumney and Lawrence White, editing by Sinead Cruise, editing by Louise Heavens)