Britain's Royal Bank of Scotland may have to shell out a further 900 million pounds ($1.1 billion) to settle a final compensation bill for mis-selling payment protection insurance (PPI) after a last-minute surge in customer claims. The state-backed bank said on Wednesday it had made an additional provision of 600-900 million pounds, on top of the 5.3 billion pounds already set aside, after claims received in August exceeded expectations.
The news gives credence to recent comments by industry experts that Britain's most costly consumer banking scandal could yet have a sting in the tail even after an August 29 deadline for claiming compensation.
Separately on Wednesday, rival Clydesdale Bank (CYBG), which also owns the Yorkshire Bank and Virgin Money brands, said it had also received "unprecedented volumes" of requests for information from customers in the run-up to the complaints deadline.
CYBG said it could take several months before determining the quality of the complaints received and the potential related financial impact. Later in the day, it said it expected to increase its provisions for legacy PPI costs by between 300 million pounds and 450 million pounds.
British banks have so far paid out more than 36 billion pounds to consumers eight years after it first emerged they were mis-sold the loans insurance on a vast scale. PPI policies were sold alongside a personal loan or mortgage to cover repayments if borrowers fell ill or lost jobs but most were sold unsuitable policies.
RBS said 4.9 billion pounds of its total provisions had already been utilised.
One such campaign was financed by Britain's banking regulator, the Financial Conduct Authority and fronted by US actor-turned-politician Arnold Schwarzenegger.
RBS's new provision will be reflected in the third-quarter results, the bank said, adding that the processing of PPI claims were ongoing and the ultimate provision recognised could be above or below the 600-900 million pounds range.