The banks involved in the mis-selling of payment protection insurance could face as much as £10bn in claims, according to some City analysts.
According to the Telegraph, it says that some bankers think the number could be far higher than the £4.2bn originally estimated by the FSA and could be closer to the £10bn mark.
Analysts at Deutsche Bank have warned that they expected industry claims to total around £8bn.
The news comes after Lloyds set aside £3.2bn to cover PPI claims. Deutsche Bank says that Barclays and Royal Bank of Scotland – which have the biggest market shares in PPI after Lloyds – may be set to pay £1.1bn and £1bn respectively. Some analysts believe the pair may face claims as high as £1.6bn.
“In our view, the charges taken against the PPI issue would have been taken after discussions with the FSA and have a negative read-across to the other UK bank, which may be now expected to take similar charges,” said Nomura analysts in a note to clients.
The British Bankers’ Association lost a judicial review against an attempt new rules on the sale of PPI last month. The BBA has until May 10 to lodge an appeal against the decision. Lloyds Banking Group yesterday announced it has decided to withdraw from the judicial review.