Lloyds share price: S&P flags further misconduct charges for UK’s ‘Big Four’

Lloyds Banking Group (LON:LLOY) and its blue-chip peers Royal Bank of Scotland (LON:RBS), Barclays (LON:BARC) and HSBC Holdings (LON:HSBA) face another £19 billion of charges relating to past misconduct over the next two years, Standard & Poor’s (S&P) has said. Lloyds, which is still about 20 percent owned by the UK taxpayer, has incurred a greater cost than its FTSE 100 peers because of mis-sold payment protection insurance (PPI).

Lloyds’ share price lost 0.57 percent to close at 78.65p yesterday. The shares have added about five percent over the past year.
S&P said yesterday in a statement that Britain’s ‘Big Four’ banks had borne £42 billion in conduct and litigation charges over the five years to 2014, equivalent to about 7.5 percent of their revenues over the period. The number represents as much as 88 percent of the industry-wide total of £48 billion in charges faced by 13 UK banks and building societies.
S&P said that PPI mis-selling was one of the three main categories of the conduct and litigation charges, the other two being interest rate hedging products and other customer redress and litigation charges.
“In general, we think that the worst period for PPI provisions has now passed,” S&P said, while adding that “conduct and litigation charges are now ‘a way of life’ for the UK banking industry”.
Lloyds, which has the biggest PPI bill so far, is expected to continue to book charges this year. Analysts at Deutsche Bank said in a note dated April 23 that they assumed a £500 million PPI charge in the second, rather than in the first quarter, and had £1 billion in their estimates for the full year, as well as further £500 million for next year. Lloyds is scheduled to release its first-quarter statement on Friday.
As of 07:41 BST, Tuesday, 28 April, Lloyds Banking Group share price is 78.65p.