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Lloyds haunted by claims

February 3, 2014

Britain's Lloyds bank has warned quarterly results will be impacted by an extra batch of provisions for the misselling of financial products. However, Lloyds said it was on its way toward rebuilding trust and confidence.

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Man walking past window of Lloyds Banking Group
Image: Reuters/Stefan Wermuth

On Monday, Lloyds Banking Group announced that it would take an additional hit of about 2 billion pounds ($3.3 billion, 2.4 billion euros) to cover claims.

The state-rescued lender, which is 33 percent owned by taxpayers, announced that it would take a provision in the fourth quarter of 1.8 billion pounds for claims relating to the misselling of payment protection insurance and another 130 million pounds to cover claims from the misselling of interest rate hedging products to small businesses.

"The provision increase is principally based on the group's revised expectations for complaint volumes and related administrative costs," the bank reported in a trading update ahead of its announcement of annual results on February 13.

Trying to regain faith

Lloyds announced that it still expected to post a small annual profit and would seek to restart shareholder dividend payments in the second half of 2014.

EU ministers agree banking accord

The group had last paid a dividend in 2008, just before it received a 20-billion-pound bailout from the government at the height of the global financial crisis.

"Our significant progress in delivering improvements in our capital position and our profitability despite legal issues is testament to the strength of our business model and has enabled the UK government to start to return the bank to full private ownership," CEO Antonio Horta-Osorio said.

hg/mkg (AFP, Reuters)