Britain’s State-owned banks plunged into the red in 2011 after paying out millions of pounds in compensation to customers for mis-sold payment protection insurance while battling to offload the remains of their toxic past. Royal Bank of Scotland and Lloyds Banking Group report full-year results this week and both are expected to show losses. Lloyds is forecast to have plunged to a pre-tax loss of about £4billion for 2011, compared with a £281million profit the previous year, after setting aside billions of pounds for compensation.

The mis-selling scandal is also the reason why Lloyds is still trying to claw back bonuses paid to former bosses, including chief executive Eric Daniels. Excluding the PPI payouts and other one-offs, the group’s underlying profits are set to be about £2billion – lower than the previous year’s £2.2billion....Read more here---: Lloyds and RBS pay price for payment protection insurance scandal