Lloyds investors burdened with extra bill for PPI payout

LLOYDS Banking Group is expected to announce another big write-off for the mis-selling of PPI insurance when it unveils its full year results.

The move is designed to give investors maximum transparency ahead of a sell-off of shares to retail investors anticipated for later this year.

Analysts say the additional red ink could be as much as £1.2bn, on top of the £8bn the bank has already been forced to set aside.

It follows a shock announcement from RBS (up 11.7p to 343.9p) earlier this week that it is writing off £3bn to pay for mis-selling and damages, including £500m for PPI.

Those write-offs could plunge RBS into an £8bn loss and have put in jeopardy any hopes of an early return to the private sector.

The situation at Lloyds (up 2.45p to 82.85p) which also had to be bailed out by the taxpayer in the financial crisis, is different as it will remain profitable even after the PPI hit and is forging ahead with a return to normality.

Chief executive Antonio HortaOsorio, above, wants to resume paying dividends and it is believed City regulators have insisted on full disclosure of possible liabilities as a condition of allowing him to re-start the payouts. Regulators and UKFI, the arm of the Government that runs the taxpayer stake in Lloyds, will also be keen that small investors, who may participate in a share offer, are made fully aware of the risks.

Lloyds has been paying out around £150m a month on PPI claims and it is thought the pot of money it previously set aside is all but exhausted.

It came as Lloyds announced plans to axe 1,400 roles, on top of the 10,000 it has already cut since 2011, as part of its plan to shed 15,000 positions over several years.

Rivals, including HSBC, may also set aside further sums to cover PPI claims. On top of that, the banks collectively face a long list of possible liabilities.

These include further fall out from the Libor scandal, where both RBS and Barclays are still embroiled in investigations.