Scandals cast a long shadow – but it will pass

Marc Sidwell
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THE obloquy seems like it will never end at times. Take yesterday, with Lloyds announcing £700m more set aside for PPI mis-selling, and revealing that it has received subpoenas over Libor-rigging. Santander also acknowledged increased PPI claims.

And yet the grinding aftermath of scandal can disguise good news as well. Santander’s share price rise over the day had more to do with Mario Draghi than fundamentals – property exposure saw its net profit halve over the first half of the year – but Santander is in a better position than many Spanish banks, with June’s audit showing it wouldn’t need rescue funds under stress. Chairman Emilio Botin said it could put “real estate write-offs in Spain behind us by the end of this year”.

Lloyds did far better, beating expectations on underlying profit and improving its balance sheet. Six months is a long time to wait for clarity on Libor liabilities speculated at £1.5bn, but Antonio Horta-Osorio is already showing that damaging scandals can be overcome.