RBS has set aside even more money to cover the cost of compensation claims for mis-sold PPI. We answer five questions on RBS’s PPI payouts.
How much more has RBS put aside to cover PPI mis-selling claims?
RBS has announced it will be setting aside a further £400m to cover future anticipated PPI compensation claims.
It has also set aside another £50m to cover the cost of compensation from a recent computer systems failure which affected customers earlier in the year.
How much has the bank spent on PPI mis-selling claims already?
Including this latest fund, a staggering £1.7bn
What about other banks?
In total, and including any latest provisions, the PPI scandal has cost UK banks £10.8bn.
Lloyds banking group has also announced it has put aside a further £1bn of provisions to cover claims.
What is RBS current financial position?
RBS, which is 80 per cent owned by the UK government, has reported a pre-tax loss of £1.26bn for the three months to 30 September, against a £2bn profit a year earlier.
The bank is also bracing itself over possible steep penalties for any involvement it might of had in alleged manipulation of the Libor inter-bank lending rate. Barclays was recently fined £290 million for attempting to manipulate libor.
Another big hit for the bank is a £1.5bn charge against its own debt due to an accounting rule that requires it to take a loss on increases in the value of its bonds.
RBS’s operating profits for the third quarter were £1bn, up from a £650m profit in the second quarter. However these figures discount the PPI mis-selling and other charges.
What has RBS said?
Chief Executive of RBS, Stephen Hester, told the BBC:
“The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully”
“The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank’s safety and soundness has advanced so well.”
Adding that the bank is too often was looked upon as putting the short-term interests of shareholders and staff above customers.