Barclays hikes misselling bill again to £3.5bn

Tim Wallace
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BARCLAYS has set aside another £1bn to compensate misselling victims as the bill for PPI and interest rate swaps scandals grows ever larger, the bank revealed yesterday.

It has allocated another £600m to the PPI redress pot taking its total so far to £2.6bn. And it has almost doubled its interest rate swaps provision, setting aside another £400m to make a total of £850m to date.

That leaves a total of £3.45bn across both misselling scandals.

The Financial Services Authority finalised its redress process for the swaps last week and this decision has enabled the bank to become more certain of the ultimate bill it will face.

Although PPI compensation payments have grown to unexpected levels the bank hopes the swaps provisions will be more predictable.

Barclays sold roughly 5,000 such products to 4,000 customers, a much more limited level than PPI sales.

And it will review every such sale under the redress scheme, rather than waiting for customers to apply as with PPI, giving the bank more certainty over the scale and timings involved.

Analysts expect the other big banks to increase their provisions in the upcoming full year results.

Nomura’s Chintan Joshi estimates Lloyds will increase its provisions from £90m to £600m, HSBC will up its own from £151m to £501m and RBS from £50m to £800m, leaving a total among the big four of £2.8bn.

And Joshi also expects them to join Barclays in hiking PPI provisions in the coming weeks, forecasting a rise of £2.14bn to a total of £12.46bn.

The bank’s shares dipped initially on the announcement but ended the day up 1.7 per cent.