Banks could be faced with £5bn PPI compensation costs, say reports
According to Reuters, UK banks could have to pay out £5bn to compensate those that accuse them of mis-selling payment protection insurance (PPI) policies after a US bank warned it faces a big hit.
Reuters said that Bank of America last week took a $592m (£374m) reserve related to future PPI claims, adding that big UK banks are likely to be even more exposed.
According to the publication,analysts at Morgan Stanley have predicted that the biggest UK retail banks could have to pay out £5.1bn to compensate customers under a worst case scenario for them. The five banks will have to pay out £2.6bn under a "base case" scenario, a manageable cost for the industry, according to Morgan Stanley.
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