Barclays tops up PPI pot by £700m
THe past of Barclays boss antony Jenkins came under the spotlight yesterday as the lender revealed it had been forced to set aside another £700m to compensate customers mis- sold payment protection insurance.
Barclays stunned the market as it confirmed its total provision had soared to £2bn. The news casts a shadow on Jenkins, who replaced Bob Diamond in July in the wake of the libor rate rigging scandal.
Jenkins has consistently stressed his credentials as a retail banker in a bid to distance itself from the sins of its ‘casino’ banking division.
But the man dubbed ‘the nice guy of banking’ was revisited by the sins inflicted on the high street under his watch. as head of Barclaycard between 2006 and 2009 Jenkins was heavily involved in the worst mis- selling scandal to hit the uK.
PPI was routinely sold alongside loans and credit cards as a safety net for customers who lost their jobs or became to ill to work. In many cases it was sold as a condition of the loan to people who would never have been able to claim on the insurance.
Barclays only stopped selling PPI in January 2009. Those close to Jenkins have insisted that most of the mis-selling occurred before he joined. But it is understood that the potential fall out from his involvement in the affair was brought up in his interviews for the top job.
marc gander from campaign group Consumer Focus said: ‘Bankers are now trying to distance themselves from investment banking.
But this shows that all of them – including Jenkins – come with baggage. They don’t have any credibility with consumers.’ Barclays was yesterday trying to reassure analysts that the bill will not continue to spiral. It said it was on course to make £1.7bn profit for the three months to the end of September. It said it has now paid £1.2bn in compensation and said it was hopeful that the final bill for mis-selling won’t exceed £2bn.
like other lenders it said it had been forced to set more money aside after being flooded with false claims from controversial ‘no win, no fee’ claims management firms. The news raised fears from analysts that other lenders will be forced to set aside more for PPI.
Ian gordon, an analyst from Investec predicted that the biggest offender, lloyds Banking group, could face another charge of £2.3bn. This would take its total provision to £6.6bn.
‘The mathematical conclusion is that lloyds may face an incremental charge of another £2.3bn. we doubt that it will be that bad, but we expect it to hurt.’