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RBS sets aside £435m for misselling claims and tech failure

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Royal Bank of Scotland has set aside a £310m provision for the misselling of financial products and a £125m provision to cover costs relating to its technology malfunction in June.

The bank’s interim results, published today, show it set aside a further £260m to cover claims relating to the misselling of payment protection insurance and £50m to cover any claims relating to interest rate swap misselling to small businesses.

As at June 30, RBS has set aside £1.3bn to cover PPI claims, with £0.7bn in redress having already been paid out.

In June, the bank suffered a technology meltdown which saw its customers unable to complete some transactions and, in some cases, direct debits were taken out twice.

The bank suffered a £1.5bn pre-tax loss for the six month ending June 30, compared to a pre-tax loss of £794m over the same period the year before.

Total income fell from £14.5bn in the six months ending June 30, 2011, to £13.3bn in the first six months of this year.

Gross lending totalled £7.7bn in the first six months of the year, with net lending totalling over £3bn.

The results state it does not yet know how much investigations conducted by US regulators and the FSA into its involvement in the rate-rigging scandal will cost. Barclays has been fined a total of £290m by US and UK regulators for its part in rigging Libor, the rate at which banks lend to each other.

The results say: “It is not possible to reliably measure what effect these investigations, any regulatory findings and any related developments may have on the Group, including the timing and amount of fines or settlements.”

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