WAS Antonio Horta-Osório being entirely honest yesterday when he denied kitchen sinking at his first set of results? Not quite: what he did was gut the Lloyds kitchen entirely, clogged dishwasher and all. Then, not content with clearing out his own house, he broke into the homes of RBS, HSBC and Barclays, and stole their kitchen sinks too – while they were sleeping.
By admitting responsibility in the Payment Protection Insurance (PPI) mis-selling scandal, Horta-Osório has effectively dashed his rivals’ chances of escaping unscathed. Yesterday, the other PPI banks were publicly insisting they haven’t yet given up hope of overturning the High Court’s decision at the Court of Appeal or Supreme Court, as they did with the bank charges case. Privately, they know the game is up.
If one assumes that Lloyds – which has around a third of the market – isn’t overestimating the £3.2bn cost of recompensing affected customers, it is easy to guess what other banks might have to put aside. RBS, which has an 18 per cent share, is on the hook for around £580m while HSBC and Barclays, who have 14 per cent each, could have to set aside about £450m.
The nasties didn’t stop with PPI provision. Impairments were £500m higher than expected, due to impairments in Ireland, while the bank was even lighter on detail than usual when it came to outlook. Net interest margin fell from 2.12 per cent in the final quarter of last year to 2.07 per cent. The bank blamed higher wholesale funding, even though one would expect wholesale funding costs to be declining. Perhaps most galling of all, Daniels received a £1.45m bonus for his stewardship of the bank. Funnily enough, Horta-Osório was tight lipped on whether he deserved it.