PPI drags down Lloyds again in new £700m hit

Tim Wallace
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LLOYDS reported a first half loss yesterday as it set aside another £700m against PPI mis-selling claims, taking its total bill to date to £4.3bn.

The majority taxpayer-owned bank said it made a management profit of £1.165bn in the six-month period, up six per cent on the year, but an overall loss of £439m thanks to “one off items” like the mis-selling bill.

Chief executive Antonio Horta-Osorio said the bank has reviewed all products to try to stop any repeat.

He also revealed the bank is looking to push forward the move to a fully ring-fenced retail bank, hoping to get the shift underway well before legislation forces the shift.

But he also argued against other regulations, claiming liquidity buffer rules are too tight, forcing banks to hold too much government debt – Lloyds holds roughly £20bn in gilts – which “crowds out” private lending.

It is thought that the bank is in discussion with the FSA over the way buffers are both measured and used, potentially allowing more lending.

Meanwhile analysts from Liberum Capital estimated Lloyds would have to pay out up to £1.5bn to settle Libor-related claims, but finance director George Culmer rejected the claim, saying the bank has not set aside any funds to cover potential payouts.

Horta-Osorio said no staff members had been fired over claims of Libor-fixing, but would not deny reports that some may have been suspended.

He specifically rejected claims made in an email from a Barclays trader to the New York Fed that Lloyds entered suspiciously low readings on 28 August 2007, saying they had in fact taken deposits at below the rate.