Britain’s ‘bad bank’ has set aside another £44.1 million to pay out future successful PPI claims.
UK Asset Resolution (UKAR) is the bank created by the government after the financial crash of 2008. It managed the assets of Northern Rock and Bradford & Bingley after the ‘good side’ of both banks were sold off – Northern Rock to Virgin Money and Bradford & Bingley to Santander.
Since then chunks of the two banks’ mortgage businesses have been sold off to large investment groups, but £13.6 billion worth of mortgages and loans remain with UKAR.
Increasing number of claims
The hike in the amount of cash set aside for PPI claims reflects an increasing number of claims being made since the Financial Conduct Authority announced the PPI claims deadline of August 29th 2019.
All of Britain’s top banks have been forced to increase the size of their PPI compensation pots as the regulator’s £42 million consumer awareness campaign urges anyone who has not yet made a claim for PPI mis-selling to do so before time runs out.
The industry has already paid out £32.9 billion in compensation – a figure which is rising by an average £⅓ billion a month – with tens of thousands of new claims are being made each week.
In its half year figures Lloyds Banking Group (LBG) said it was receiving 13,000 claims a week following the launch of the ‘Do It Now’ campaign featuring Terminator Arnie Schwarzenegger.
UKAR is making steady progress in paying back the billions of pounds of taxpayers’ money used to nationalise Northern Rock and Bradford & Bingley back in 2010.
Chief executive Ian Hares said: “In the first half of the year, we repaid the remaining FSCS (Financial Services Compensation Scheme) debt and agreed the sale of a portfolio of equity release mortgages.
“These are major steps towards realising our objective of reducing the balance sheet while continuing to maximise value for the taxpayer.”
UKAR has managed to repay 92% of the £115 billion bail-out cash, leaving just £13.6 billion still on the books. Lloyds Banking Group was returned to private ownership last year, having repaid its £20.3 billion bail-out cost.
But Royal Bank Of Scotland (RBS) remains 62% owned by the taxpayer though there are plans to re-privatise it in the future, even if the shares have to be sold at a loss. The shares were originally bought at 502p each, but are currently trading at less than half of that.
Chancellor of the Exchequer Philip Hammond has put in place a plan to sell off £3 billion blocks of shares over the next three years after he admitted to MPs that they would have to be sold at a loss if the bank was ever to return to private ownership.
Speaking at an event to mark the 10th anniversary of the government rescue RBS chairman Sir Howard Davies said: “The bank was rescued to save the UK financial system from collapse, not as a financial investment.
The government had little choice but to take the route it did, given the little time it had to act and the scale of funds required.”