Barclays takes 700 mn stg hit on PPI

Barclays shares were down 1.5 percent at 1424 GMT,one of the weakest European bank stocks.

It had paid out 1.2 billion pounds in compensation by the end of September,leaving 800 million to cover expected future redress for customers.

PPI policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers fell ill or lost jobs,but they were often sold to people who would never have been able to claim.

Britain’s banks have now set aside over 10 billion pounds to compensate customers wrongly sold policies,now one of the worst consumer financial scandals in British history.

Data released by Britain’s financial regulator showed payouts by UK banks fell in June and July after they paid out 730 million pounds in May,raising hopes among banks that claims had peaked,but Barclays’ move show claims rose again in August and September.

Lloyds Banking Group has set aside 4.3 billion pounds for PPI mis-selling,and Barclays has now provisioned the second highest amount. RBS has set aside 1.2 billion pounds,HSBC 1.1 billion and Santander UK 538 million.

Barclays made the disclosure ahead of its third-quarter results due out on Oct. 31. It said adjusted profits in the three-month period,which exclude the PPI provision,should be broadly in line with analysts’ forecasts of 1.7 billion pounds.