(qlmbusinessnews.com via theguardian.com – – Mon, 9th Sept 2019) London, Uk – –
Bank says in run-up to deadline it was receiving 800,000 inquiries a week
Lloyds Banking Group will incur a further charge of up to £1.8bn to cover claims relating to mis-sold payment protection insurance after being hit by a surge in claims last month.
Lloyds said the last-minute rush was bigger than expected, and has prompted it to make another PPI charge of between £1.2bn and £1.8bn. At the top end, this is double the £900m charge taken by Royal Bank of Scotland last week, which also saw a last-minute surge in claims. CYBG, which owns the Clydesdale and Yorkshire banks and Virgin Money, also warned last week that it faced a potential bill of £450m for new claims.
The latest charge takes Lloyds’s total compensation bill to nearly £22bn – by far the largest of all the banks. In total, the five major high street banks have set aside more than £40bn to compensate people who purchased often worthless cover in what has become the UK’s largest mis-selling scandal.
Since Lloyds started taking claims in 2011, it has typically received 70,000 PPI information requests a week, but this soared to 600,000 to 800,000 a week in the final weeks before the 29 August deadline.
Lloyds said the number was “higher than expected, with a significant spike in the final days before the deadline expired”.
In light of this, the bank has decided to suspend the remainder of its 2019 share buyback programme, leaving £600m of the £1.75bn programme unused. Lloyds expects capital growth, and its return on equity, to be below its previous guidance, with the final outcome dependent on the actual PPI charge taken.
The latest provision comes on top of £550m in PPI charges taken in the second quarter, which pushed down Lloyds’s pretax profits by 7% to £2.9bn for the six months to the end of June.
By Julia Kollewe