View more on these topics

RBS warns PPI losses could be ‘material’

Royal Bank of Scotland has warned the it may face material losses over payment protection insurance compensation but says it cannot estimate the cost because of uncertainties around the final outcome of the British Bankers’ Association judicial review.

Last month the BBA lost a judicial review into the FSA’s complaints handling measures for PPI and has until May 10 to launch an appeal.

The bank’s Q1 interim management statement says: “The uncertainties mean that, at this time, the group is unable reliably to estimate any potential financial liability, although it could prove to be material.”

It comes after yesterday Lloyds announced that it had made a £3.2bn provision to cover the cost of any compensation adding that it was withdrawing from the BBA’s action.

Today city analysts have estimated compensation could cost the industry as much as £10bn.

RBS has also revealed a pre-tax loss of £116m in Q1 of 2011, up from the £8m lost in the final quarter of last year.

At an operating level, RBS posted a profit of £1.05bn, up from £55m in Q4 of 2010, but its net loss of £528 in Q1 included a £469m charge under the Government’s Asset Protection Scheme and a £480m charge against its debt.

The bank saw a rise in its capital buffer from 10.7 per cent in 2010 to 11.2 per cent in this quarter but said it intends to reduce that around 8 per cent by 2013, one per cent higher than that which will be required under Basel III.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Exasperated Me 6th May 2011 at 9:48 am

    “Dear FSA, we need to stall these claims while we milk our customers to build up the funds.”

    “Dear banks, yes that will be fine”

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com