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Lloyds TSB defeated - withdrawal PPI battle.
Well the game is up on these folks.
http://www.guardian.co.uk/business/2...otection-costs
Lloyds dragged back into red by £3bn payment protection charge
The bank has reported a pre-tax loss of £3.4bn – barely three months after former boss Eric Daniels heralded the first return to profit since the financial crisis and was awarded a £1.45m bonus.
Lloyds Banking Group had make a pre-tax profit of £1.1bn in the same three months a year ago Photograph: John Stillwell/PA
Bailed out Lloyds Banking Group has sunk to a deep first-quarter loss after taking a larger than expected provision of £3.2bn to cover the costs of misselling payment protection insurance.
New chief executive António Horta-Osório said the provision – three times bigger than many estimates – was "absolutely prudent and the right thing to do". The Portuguese-born banker, who took the helm on 1 March after running the UK arm of Santander, signalled a truce with the Financial Services Authority over PPI, saying: "It is appropriate to take a provision now and move on."
Shares in the bank, in which the taxpayer has a stake of more than 40%, were the biggest fallers in the FTSE 100 on Thursday morning, losing 5% to 55p and dragging rivals lower.
Horta-Osório insisted he was not "kitchen sinking" as the bank also upped the charge for bad loans by £500m more than expected, blaming the situation in Ireland. Lloyds was a major lender following its rescue of HBOS during the 2008 banking crisis. It is expecting another 10% fall in commercial property prices in Ireland and the total group impairment charge is £2bn for the first quarter.
The £3.2bn provision for PPI forced the bank to report a pre-tax loss of £3.4bn barely three months after the former boss Eric Daniels had heralded the return to a first full-year profit for the bailed-out bank since the crisis and was awarded a £1.45m bonus.
The bank had made a pre-tax profit of £1.1bn in the same three months a year ago and insisted that its performance was "satisfactory" on what it calls a combined business basis, which strips out the costs associated with the integration. On this measure profits were £284m.
The PPI provision follows the high court judgment on 20 April which upheld a ruling by the FSA that banks should compensate customers retrospectively for PPI. The FSA has estimated its new rules will lead to PPI providers paying out up to £1.3bn in compensation for new complaints received during the coming five years, and up to £3.2bn as a result of reviewing previous PPI sales and pro-actively contacting customers to offer them redress. That total £4.5bn bill now looks unclear in the context of the size of the provision taken by Lloyds, which under previous management had resisted taking any provisions for redress and stalled on paying claims.
The British Bankers Association, which had been leading the court action against the FSA, has until the middle of next week to ask for leave to appeal the high court judgment.
The BBA said: "The BBA is are presently carefully reviewing the judgment of 20 April and considering whether to make an application to appeal. This decision must be made by 10 May. We will make a decision in due course."
Horta-Osório has made it clear that Lloyds no longer intended to participate in the industry-wide action. "We will not be participating in the BBA review," he said.
"It is the sensible, prudent and right thing to do," he said of the U-turn. "We believe it draws a line under this issue," he said, adding it provided "certainty" for customers and was "in the long-term stability" for the business. But he would not disclose how many customers it had sold PPI to and how many can now expect redress.
The £3.4bn of losses also included integration costs £333m, which have now topped £3bn since the HBOS deal.
Lloyds reiterated its surprise at the independent banking commission's decision to suggest more branches should be sold off in addition to 600 branches demanded by the EU in return for almost £20bn of taxpayer aid and warned could delay the existing sales process which Horta-Osório had accelerated when he arrived in March.
For the whole of 2010 the bank took £13.1bn of bad debt provisions – some £5.7bn related to problems in Ireland and Australia inherited from the controversial HBOS deal.
In the first quarter it blamed Ireland for the £500m larger than expected rise in provisions. "During the past three months, a further approximately 7% of the £27.6bn Irish book has become impaired, resulting in approximately 60% of the portfolio now being impaired. Provisions as a percentage of impaired Irish loans were 56% at the end of March 2011," the bank said.
The group also took a charge of £70m in the quarter as a result of losses arising from the earthquake in New Zealand.
Analysts noted that first-quarter income had fallen to £5.2bn as higher funding costs hit margins, which the bank had already warned were under pressure.
The bank is prohibited from paying dividends by the EU.
Well the game is up on these folks.
http://www.guardian.co.uk/business/2...otection-costs
Lloyds dragged back into red by £3bn payment protection charge
The bank has reported a pre-tax loss of £3.4bn – barely three months after former boss Eric Daniels heralded the first return to profit since the financial crisis and was awarded a £1.45m bonus.
Lloyds Banking Group had make a pre-tax profit of £1.1bn in the same three months a year ago Photograph: John Stillwell/PA
Bailed out Lloyds Banking Group has sunk to a deep first-quarter loss after taking a larger than expected provision of £3.2bn to cover the costs of misselling payment protection insurance.
New chief executive António Horta-Osório said the provision – three times bigger than many estimates – was "absolutely prudent and the right thing to do". The Portuguese-born banker, who took the helm on 1 March after running the UK arm of Santander, signalled a truce with the Financial Services Authority over PPI, saying: "It is appropriate to take a provision now and move on."
Shares in the bank, in which the taxpayer has a stake of more than 40%, were the biggest fallers in the FTSE 100 on Thursday morning, losing 5% to 55p and dragging rivals lower.
Horta-Osório insisted he was not "kitchen sinking" as the bank also upped the charge for bad loans by £500m more than expected, blaming the situation in Ireland. Lloyds was a major lender following its rescue of HBOS during the 2008 banking crisis. It is expecting another 10% fall in commercial property prices in Ireland and the total group impairment charge is £2bn for the first quarter.
The £3.2bn provision for PPI forced the bank to report a pre-tax loss of £3.4bn barely three months after the former boss Eric Daniels had heralded the return to a first full-year profit for the bailed-out bank since the crisis and was awarded a £1.45m bonus.
The bank had made a pre-tax profit of £1.1bn in the same three months a year ago and insisted that its performance was "satisfactory" on what it calls a combined business basis, which strips out the costs associated with the integration. On this measure profits were £284m.
The PPI provision follows the high court judgment on 20 April which upheld a ruling by the FSA that banks should compensate customers retrospectively for PPI. The FSA has estimated its new rules will lead to PPI providers paying out up to £1.3bn in compensation for new complaints received during the coming five years, and up to £3.2bn as a result of reviewing previous PPI sales and pro-actively contacting customers to offer them redress. That total £4.5bn bill now looks unclear in the context of the size of the provision taken by Lloyds, which under previous management had resisted taking any provisions for redress and stalled on paying claims.
The British Bankers Association, which had been leading the court action against the FSA, has until the middle of next week to ask for leave to appeal the high court judgment.
The BBA said: "The BBA is are presently carefully reviewing the judgment of 20 April and considering whether to make an application to appeal. This decision must be made by 10 May. We will make a decision in due course."
Horta-Osório has made it clear that Lloyds no longer intended to participate in the industry-wide action. "We will not be participating in the BBA review," he said.
"It is the sensible, prudent and right thing to do," he said of the U-turn. "We believe it draws a line under this issue," he said, adding it provided "certainty" for customers and was "in the long-term stability" for the business. But he would not disclose how many customers it had sold PPI to and how many can now expect redress.
The £3.4bn of losses also included integration costs £333m, which have now topped £3bn since the HBOS deal.
Lloyds reiterated its surprise at the independent banking commission's decision to suggest more branches should be sold off in addition to 600 branches demanded by the EU in return for almost £20bn of taxpayer aid and warned could delay the existing sales process which Horta-Osório had accelerated when he arrived in March.
For the whole of 2010 the bank took £13.1bn of bad debt provisions – some £5.7bn related to problems in Ireland and Australia inherited from the controversial HBOS deal.
In the first quarter it blamed Ireland for the £500m larger than expected rise in provisions. "During the past three months, a further approximately 7% of the £27.6bn Irish book has become impaired, resulting in approximately 60% of the portfolio now being impaired. Provisions as a percentage of impaired Irish loans were 56% at the end of March 2011," the bank said.
The group also took a charge of £70m in the quarter as a result of losses arising from the earthquake in New Zealand.
Analysts noted that first-quarter income had fallen to £5.2bn as higher funding costs hit margins, which the bank had already warned were under pressure.
The bank is prohibited from paying dividends by the EU.
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