Lloyds Bank payment protection claims bill tops £13bn

It is one of a number of scandals, including the attempted rigging of benchmark interest and foreign exchange rates, which have undermined public trust in Britain’s banks.

This was despite incurring a further charge of £435 million the first half of 2015.

The amount overall the bank has set aside to pay for PPI now totals a “painful” £13.4bn “rather higher than the market had anticipated” Richard Hunter, at Hargreaves Lansdown said.

Lloyds boss Antonio Horta-Osorio said he was “disappointed” with the situation.

Lloyds’ total regulatory charges so far this year are therefore far above the £850m Barclays announced for the same objective this week, and the £459m quarterly misconduct and litigation costs RBS revealed on Thursday.

Lloyds trades on about 1.6 times tangible net asset value (TNAV) per share of 53.5p, Investec Securities is not impressed though.

Telegraph columnist James Quinn has said that the government could avoid a retail offer of Lloyds shares and keep its “powder dry” for the exit of Royal Bank of Scotland, where a profitable alternative is unlikely given the share price remains well below the 2008 level.

This is expected to make the stock more attractive for a “Tell Sid” style sell-off to ordinary retail investors that is being planned, likely to come at the end of the continuing return to the private sector. “If any bank fails to do this, the regulator must step in”.

This overshadowed an improved half-year performance which saw Lloyds’ pre-tax profits rise 38% to £1.19bn despite the conduct hit and a £660million charge related to the sale of its stake in TSB to its new owner, Spain’s Banco de Sabadell.

Lloyds Banking Group Plc is starting to look at acquisitions for the first time since it required more than 20 billion pounds ($31 billion) of state aid in the financial crisis, a person with knowledge of the matter said.

Lloyds Banking Group joined the “groundhog week” for UK banks on Friday when it said above-forecast profits were slashed by compensation costs.

He added that the interim dividend was “still something of a gesture at this point although compared to the first half of 2014 it is, quite literally, better than nothing”. It is assuming a significant decrease over the next 18 months but without this it would have to add £3 billion to its provisions over the scandal. Strip out those fines and one-off costs, and Lloyds made nearly £4.4 billion, up 15% – impairments plunged by 75% and total income rose 2% to almost £9 billion.