British banks set aside 10b pounds to compensate clients
LONDON (AFP) - British banks have ramped up the amount of cash they are setting aside to compensate clients who were mis-sold insurance policies to more than 10 billion pounds (S$19.6 billion), significantly slashing their profits in the process.
The latest earnings season for major banks wrapped up on Monday, with HSBC announcing it was hiking provisions to compensate customers in Britain who were mis-sold payment protection insurance (PPI) to US$353 million (S$432 million).
That brought its provision to US$2.1 billion, about a fifth of the 10 billion pounds total set aside by Britain's banks, which have also been rocked by humbling state bailouts, money-laundering and the Libor rate-rigging scandal.
PPI is "turning out to be the most economically damaging crisis, there's no question about that but what is probably the most surprising of all is that the banks themselves have been completely unable to determine how much they have to pay", independent banking analyst Ralph Silva told AFP.