Barclays to take unexpected hit from PPI claims

Barclays has just announced that it has set aside a further 700m pounds in provisions against the possible costs associated with compensating customers for mis-sold payment protection insurance (PPI), taking its total provisions for this concept to 2bn pounds.

That is the second largest such provision to date by a UK bank, behind Lloyd's £4.3bn.

The lender explained that: "Based on claims experience to date and anticipated future volumes, the resulting provision includes Barclays best estimate of expected costs of future PPI redress," Barclays said in a statement. "Barclays will continue to monitor actual claims volumes and the assumptions underlying the calculation of its PPI provision."

Start your trial of MoneyWeek today

Get unparalleled financial insight, analysis and expert opinion you can profit from.

Start your trial

Sign up for MoneyWeek’s free twice-daily newsletter.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.

Sign up

As a result of the above, Barclays is now expected to unveil at least a £100m loss for the third quarter on the next October 31st, when it presents its results for the most recent period to shareholders.

The disclosure will come as a negative surprise for all its stakeholders, especially after the Finance Director indicated last July that he felt enough provisions had already been set aside and that these were declining.

Shares of Barclays were falling by 1.7% to 240.2p at 16:05.

AB