Barclays’ bill for PPI mis-selling swells by £600m

Barclays has seen its bill for PPI compensation swell. Picture: Leon Neal/AFP/Getty Images
Barclays has seen its bill for PPI compensation swell. Picture: Leon Neal/AFP/Getty Images
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Barclays has set aside an extra £600 million to meet compensation claims for mis-selling of payment protection insurance (PPI).

The sum, revealed in a third-quarter trading update, exceeded some banking expert estimates for £500m and brings the total provision over the past two quarters alone to £1 billion, after £400m was put aside in the second quarter.

The banking industry’s overall PPI bill already stands at more than £30bn.

READ MORE: Lloyds sets aside £1bn extra to cover PPI mis-selling

The Financial Conduct Authority (FCA) has put a June 2019 deadline on claims in an effort to draw a line under what has been one of the biggest banking scandals in history.

Barclays also announced today that its statutory pre-tax profit for the three months to the end of September jumped 35 per cent to £837m.

However, net operating income fell to £4.7bn in the quarter, from £5bn in the same period last year.

Chief executive Jes Staley said the bank is still focused on selling down and disposing of its non-core businesses as quickly as possible to focus on its operations in the UK and US.

He added: “The growing momentum in attaining our strategic goals means we can feel optimistic of our prospects of completing the restructuring.

“Our core businesses are performing well, non-core rundown is approaching the final lap toward closure, we are on top of costs, and our capital position is resilient with strong reasons for confidence in meeting our end state target.”

Barclays earlier this month announced plans to sell its Egyptian business to Attijariwafa Bank for a price understood to be about $500m (£409m).

The overhaul has also seen the lender sell its Barclaycard credit card operations in Spain and Portugal to Bancopopular-e and sell down its 62.3 per cent stake in Barclays Africa.

In August, the bank also sold its risk analytics and index unit to Bloomberg for about £615m.

“Taken together, the picture in the third quarter is one of strong progress against this agenda,” Staley said.

Barclays also said that the group’s main pension scheme deficit ballooned to £1.1bn, compared with an £800 million surplus at the end of last year.

However, the bank said that the pain of PPI provisions and the pension deficit was partially offset by “favourable” currency moves, following the devaluation of the pound in the wake of the EU referendum.

Sterling has fallen nearly 20 per cent against the US dollar since the Brexit vote, aiding multinational firms like Barclays, which benefit from income in stronger foreign currencies.

The bank’s currency translation reserve grew to £2.4bn as of 30 September, from £1.7bn at the end of June.

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