Lloyds Banking Group unnerved the market this week by announcing yet another jump in its provision for mis-selling payment protection insurance (PPI).It has set aside a further £1.8bn in compensation.
It is now unlikely to resume paying a dividend until later this year or 2015. The Treasury aims to sell some of its stake in the bank back to private hands this year.
What the commentators said
It probably won't be the last, said Jill Treanor in The Guardian. Not long ago the bank said it thought the number of PPI complaints would start to wind down; now it apparently expects another 550,000 claims. "This management team has some explaining to do."
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The bank has now set aside almost £10bn for PPI payments, enough to give the entire country a 2.5p reduction in basic income tax for a year. "Quite a bill" considering that Lloyds had insisted it was on the side of the angels' when it came to PPI, said Treanor.
Lloyds' ongoing difficulties, and the delay in the dividend payment, suggest that the government shouldn't rush to return the bank to the private sector, said Ian King in The Times.
Postponing the sale offers the prospect of better returns in future if it wants to maximise profits from getting Lloyds off its hands which, given the low odds on "getting any kind of return from RBS any time soon, it should certainly" be seeking to do.
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