British bank Barclays revealed on Thursday that it will set aside another £700 million ($1.13 billion, 862 million euros) to compensate clients who were mis-sold insurance, taking its total bill to £2.0 billion.
“Barclays has experienced higher than previously anticipated levels of Payment Protection Insurance (PPI) claim volumes since the end of the first half, and has therefore determined that it is appropriate to provide a further £700 million,” the lender said in a statement.
“This is in addition to provisions recognised of £1 billion in 2011 and £300 million in the first quarter of 2012.
“Based on claims experience to date and anticipated future volumes, the resulting provision includes Barclays best estimate of expected costs of future PPI redress,” the bank said, adding it would continue to monitor claims volumes.
Barclays, which will announce third-quarter results on October 31, added that adjusted pre-tax profits, before exceptional items, would be “broadly in line with current market consensus of £1.7
billion” for the three months to September.
Thursday's announcement comes as Barclays fights to restore its battered reputation in the wake of a series of scandals, including the Libor rate-rigging affair and the mis-selling of interest rate swap arrangements.
Back in April 2011, Britain's biggest banks lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as loans, mortgages or payment cards.
PPI became controversial after it was revealed that many consumers had been sold it without understanding that the cost was being added to their loan repayments.
British authorities subsequently banned simultaneous sales of PPI and credit products.
The nation's biggest banks have suffered large PPI provisions that slashed their profits. HSBC racked up a total PPI compensation bill of £1.7 billion, Lloyds Banking Group booked a hefty £4.3 billion and Royal Bank of Scotland £1.3 billion.
In reaction to Thursday's news, Barclays saw its share price dive 1.6 percent to 240.5 pence in afternoon trade on London's FTSE 100 index of leading companies, which edged 0.05 percent higher. - Sapa-AFP