Lloyds hit by US$1.5b charge for customers
Print Edition
BRITAIN’S Lloyds Banking Group has taken another 900 million pound (US$1.5 billion) charge to compensate customers mis-sold loan insurance, delivering a further blow to the bank which only narrowly passed a European health check.
The new charge yesterday took the bank’s total cost to cover the mis-selling of payment protection insurance (PPI) to 11.3 billion pounds, more than any other bank and close to half of the total bill for the industry.
The policies were meant to cover repayments if customers fell ill or lost their jobs but were often sold to people who did not need them or would be ineligible to claim.
Analysts at Citi said they expected Lloyds to set aside another 1 billion pounds for PPI compensation next year and Lloyds Finance Director George Culmer said on a conference call he could not rule out further increases.
The new mis-selling charge comes two days after the bank, 25 percent-owned by the British government, only narrowly passed a test set by regulators to assess whether banks have enough capital to weather another economic crash.
Lloyds, which was the worst performing British bank in the European stress test, faces a further test by the Bank of England in December which will measure its resilience against scenarios including a 35 percent drop in house prices and a rise in interest rates to 6 percent.
The result of that will be key to whether the bank is cleared by Britain’s financial regulator to pay its first dividend since it was rescued by a 20.5 billion pound government bailout during the financial crisis of 2007-2009.
“Whilst we do not see failure as having capital raising implications, we no longer expect Lloyds to pay a 2014 dividend,” said Macquarie analyst Ed Firth.
Culmer said he expected Lloyds to pass the BOE stress test and remained confident the bank would be cleared to pay a “modest” dividend for 2014.
“The discussions look at earnings, they look at capital and they look at stress tests. We consider ourselves to be in a good position with regards those three criteria as we go into those discussions,” he said.
Lloyds confirmed its previously reported plan to axe 9,000 jobs in the next three years and to close 200 branches. That will be partly offset by the opening of 50 new branches.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
