UK banks suffer PPI losses
Barclays and Royal Bank of Scotland report losses following surge in claims
Barclays has confirmed a £1.4bn ($1.8bn, €1.6bn) hit to its balance sheet following a rush of payment protection insurance (PPI) claims.
Royal Bank of Scotland (RBS) also announced a quarterly loss because of the £900m put aside to cover PPI claims. Lloyds Banking Group says it expects a claim of between £1.2bn and £1.8bn.
The deadline for PPI claims was August 29. The UK Financial Conduct Authority reported a total of 4.29 million complaints in the first half of 2019, an increase from 3.91 million in the second half of 2018. More than £33bn has been paid out so far.
Despite a third quarter double-digit rise in pre-tax profit, Barclays issued a profit warning due to the uncertain economic outlook. It aims for a return on tangible equity of more than 9 per cent this year and more than 10 per cent for 2020.
The RBS investment banking arm, NatWest Markets, reported a £193m loss for the quarter. It cited a “deterioration in economic sentiment for the global economy and a fall in bond yields” as the principal reasons.