Lloyds warns mis-selling could cost it an extra $2.2 bn

LONDON: Lloyds Banking Group will set aside up to an extra £1.8 billion ($2.2 billion) to settle mis-selling claims in Britain’s costliest consumer banking scandal, and said it was suspending its 2019 share buyback programme. Banks are putting aside more money to pay claims against mis-sold payment protection insurance (PPI) following a rush of consumer enquiries about compensation ahead of the deadline on August 29. PPI policies were sold alongside a personal loan or mortgage to cover repayments if borrowers fell ill or lost jobs, but many were unsuitable. The PPI saga has already cost lenders more than £36 billion in payouts, with analysts estimating the final bill could top £50 billion. RBS said it faced additional costs of up to £900 million, while Clydesdale Bank made a fresh £300-450 million provision. As Britain’s biggest domestic lender, Lloyds has been the most exposed to PPI and has already paid out more than £20 billion. Lloyds said on Monday it had received 600,000-800,000 requests for information about PPI in August, well above its expectations of around 190,000. As a result, it expects to set aside a further £1.2-1.8 billion in its third quarter results to cover payouts. The bank’s shares fell more than 2 per cent in early trading. Lloyds also said it had received a claim submitted by the Insolvency Service’s Official Receiver on behalf of bankrupt consumers, pushing costs higher. It added the charge would dent its profitability and scrapped guidance for a return on tangible equity of around 12 per cent this year. It also warned the increase in its capital ratio in 2019 would be below its 170-200 basis points per annum guidance. — Reuters