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| Lloyds makes half-year loss after upping PPI provision | Lloyds makes half-year loss after upping PPI provision |
| (about 1 hour later) | |
| Lloyds Banking Group has posted a half-year loss of £439m and has increased provision for payment protection insurance (PPI) claims by £700m. | Lloyds Banking Group has posted a half-year loss of £439m and has increased provision for payment protection insurance (PPI) claims by £700m. |
| It is the second time this year Lloyds, which is 39% owned by the taxpayer, has increased the provision. | |
| It takes the total set aside for PPI claims from £3.2bn to £4.27bn. | |
| Millions of loans were sold with the PPI attached, which was supposed to cover repayments in the event of illness or unemployment. | Millions of loans were sold with the PPI attached, which was supposed to cover repayments in the event of illness or unemployment. |
| The bank increased underlying profit by £715m to £1.1bn. | |
| Many people were either not told they had bought it, or had bought it and were not eligible to claim on it. | Many people were either not told they had bought it, or had bought it and were not eligible to claim on it. |
| The provisions do not simply cover the cost of compensation claims for those sold inappropriate products but also the cost of dealing with unfounded claims. | |
| Antonio Horta-Osorio, the chief executive of Lloyds, has said that one in four claims relates to people who did not have a PPI policy with the bank in the first place, but establishing whether these people have a case and maintaining contact with them still costs time and takes money. | |
| Libor scandal | |
| The latest scandal to emerge from the banking industry is Libor rate-fixing, where leading banks are being investigated for giving false reports of the amount they were paying to borrow from other banks. Barclays has already been fined by regulators for fixing rates. | |
| Lloyds said in its statement that it was currently not possible "to predict the scope and ultimate outcome" of various investigations but confirmed that its employees were involved in the investigations. | |
| "Certain members of the group have received subpoenas and requests for information from certain government agencies and are co-operating with their investigations," it said. | |
| It added that some of its employees were defendants in private lawsuits, including "purported class action suits in the US with regard to the setting of Libor". | |
| Lending | |
| Earlier this month, Lloyds, which is the biggest bank in the UK, and owns Halifax Bank of Scotland, agreed to sell more than 600 of its branches to the Co-operative Bank as part of a divestment programme ordered by competition authorities. | Earlier this month, Lloyds, which is the biggest bank in the UK, and owns Halifax Bank of Scotland, agreed to sell more than 600 of its branches to the Co-operative Bank as part of a divestment programme ordered by competition authorities. |
| Lloyds said the outlook for the UK economy was "subdued and vulnerable to developments in the eurozone". | |
| On lending to small businesses, it said it was on track to meet its commitment on lending £12bn to businesses this year and would be able to raise this by £1bn because of the government's recently announced Funding for Lending scheme. |