Bank expected to make loss of £100m in Q3
Barclays has set aside an additional £700m in compensation for customers who were mis-sold payment protection insurance (PPI).
The bank, which agreed to a $450m settlement with British and American authorities in June in connection with the Libor rate-rigging scandal, had already made provisions of £1.3bn to compensate clients who were sold insurance that covered them if they were laid off or became ill.
Barclays said it was setting aside the extra money after receiving more PPI claims than expected during the first half of the year.
The extra provision is expected to push the bank into a loss of about £100m in the third quarter. That loss includes an accounting adjustment of £1.1bn to the value of the bank’s debt.
Barclays said in a statement it had experienced “higher than previously anticipated levels of PPI claim volumes” since the end of the first half of the year.
The bank has paid out £900,000 in PPI compensation so far.
Analysts expect the UK’s four biggest banks to set aside an additional £2.2bn over the last quarter to cover PPI mis-selling, taking the total for the sector as a whole close to £12bn.
Nomura analyst Chintan Joshi forecasts Lloyd’s Bank will have to set aside an additional £1bn, RBS £350m and HSBC £150m.
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