Lloyds boss snubs rivals
LLOYDS’ new head Antonio Horta-Osório blindsided other bank chiefs yesterday by taking a unilateral decision not to participate in an industry appeal against a high court ruling that could cost the banks billions.
A board member at a rival bank said that the Lloyds boss had angered his counterparts by going it alone and showing that he was “not in the club” on the issue. Banks have to decide by next Tuesday whether to collectively appeal a ruling that they must pay compensation retrospectively to customers who were mis-sold payment protection insurance (PPI).
Lloyds also shocked the market by estimating its costs from the case at £3.2bn, far above expectations and out of kilter with the FSA’s estimate last year that the PPI issue would cost the industry as a whole £4.5bn.
Other banks had so far refused to guess at their costs, although Lloyds is understood to have cleared its figure with the FSA before publication. RBS, which reports interim results this morning, was said to feel ambushed by the Lloyds move: it is likely to face pressure to match its rival’s disclosure.
Horta-Osório’s move marks the second time he has unilaterally pulled out of the industry-wide PPI case: last October, when he still led Santander UK, the bank decided not to participate in the case.
It is understood that he sees the latest decision as a matter of picking battles: Lloyds is fighting fiercely to avoid forced branch sales beyond the 600 it must sell already after the Vickers Commission said it would push for more. Rather than fight on two issues, Horta-Osório has decided to focus on the branches.
Lloyds’ high estimate of its costs sent its stock plummeting, with eight per cent wiped off its shares by the end of the day. Overall, the UK’s four biggest banks lost £1.2bn from their market cap yesterday.