RBS the latest bank to pay for bad practicePPI compensation for banks tops £10bn
05 August 2012
Royal Bank of Scotland reported a loss of £1.5bn in the first half of 2012, results not helped by a major computer systems failure and compensation payouts including to customers mis-sold payment protection insurance (PPI).
The bank, majority owned by the UK government, took a £125m hit after its IT breakdown, which left NatWest customers unable to pay bills, view their transactions online and receive payments, including wages.
RBS pays PPI price
RBS also set aside another £135m (taking its total to £1.3bn) to compensate customers that were mis-sold payment protection insurance (PPI), a scandal that has now resulted in provisions of over £10bn from UK banks.
Stephen Hester, RBS' chief executive, said that the reputation of the banking sector had hit 'new lows', having been rocked by a succession of scandals and mishaps. RBS has also allocated £50m to compensate small and medium sized businesses that were mis-sold interest rate swaps, while its results also suffered from a £2bn accounting charge on its own debt.
The half year results of Barclays, Lloyds and HSBC have also been impacted by PPI provisions, with Barclays fined £290m for manipulating benchmark interest rates, which could yet lead to further recriminations for banks.
HSBC and Lloyds also face payouts
HSBC has also been making the headlines for the wrong reasons and has set aside $700m to cover fines and costs related to money laundering activities and admitted that the bill may rise above $2bn (£1.27bn).
Lloyds announced a statutory pre-tax loss of £439m for the first half of this year, impacted by a further £700m PPI provision, having already set aside £3.6bn.
Action point: If you think you may have been mis-sold PPI, use our PPI checklist to find out if you could be eligible for compensation. If you decide to make a complaint, you can use our free online PPI complaint tool to generate your letter.