Clydesdale adds extra £100m for PPI claims

The decision by the UK operations of National Australia Bank (NAB) came after the British Bankers Association (BBA) recently decided not to appeal against an adverse ruling on the issue in the High court.

Lynne Peacock, chief executive of NAB UK, said: "As a bank we were not involved in the judicial review, but as the outcome of the BBA case is now clear it is prudent for us to provide against future PPI claims as other banks have done.

"Our assessment of 100m is based upon estimates and assumptions that continue to be uncertain, but we feel this is an appropriate amount to account for claims yet to be received and the probability of success of those claims."

NAB UK had made an initial 15m provision against PPI claims in their interim results on 5 May.

In April the High Court had ruled in favour of Britain's Financial Services Authority and Financial Ombudsman Service's approach to handling PPI sales complaints.

The court ruled the banks must adhere to the FSA's rules requiring them to review all previous sales to assess if customers have a claim - a restrospective approach challenged by the BBA when it asked the court for the judicial review.

Other banks are facing claims, with Lloyds Banking Group the most exposed with a 3.2bn provision. Speculation among some Australian banking analysts that the latest provision means NAB will have to inject more funds into its UK subsidiary are understood to be wide of the mark.

However, Clydesdale and Yorkshire banks' latest provision virtually wipes out the 101m pre-tax halftime profit.

PPI policies are meant to cover loan repayments in case of accident, illness or redundancy. But many were sold to borrowers wrongly told PPI was a pre-condition for a loan rather than optional, and to others who did not realise they had taken out a policy.