Lloyds and RBS stocks declined after the two banks were reported to offer part of their profits to the latest £5 billion collective allocation to the PPI refund total. Santander UK declared a £450m loss as their contribution to the new collective total. Aside from the three banks, HSBC and Barclays have yet to announce their share.
The Spanish bank said on Wednesday its net profit had increased by 3 per cent the previous year to €5.97 billion (£4.55 billion). In the previous year, it had set aside a total of £400m for its PPI misgivings.
In total, Santander has a £1.5 billion PPI bill.
The latest PPI allocation has shaken the profits of the entire Santander group including those in Spain and Brazil. However, the bank expects it to be its final allocation for the scandal.
PPI mis-selling is the UK’s scandal with the biggest losses for the financial industry. Currently it has reached a total of £29 billion.
Analysts were quick to rebut this particular expectation. Post-FCA consultation, the bank may continue to face increased number of complaints from consumers who have yet to make their claim. This would mean Santander UK’s relatively low bill of £1.5 billion may potentially increase by £500 million before the scandal ends in 2018.
In 2019, the Prudential Regulation Authority of the Bank of England would introduce rules in 2019 that would make sort codes mandatory for all consumer accounts as part of the ringfencing that would separate high-street operations from high-risk lending and investment practices.