Banks set to hold out their hands after picking up huge bills

A soaring bill to repay armies of customers who were mis-sold products coupled with regulators’ demands for bigger buffers against future crises could force banks to seek more capital from shareholders, analysts warn.
Banks were last week facing the threat of payouts over the mis-selling of hedging products.
Royal Bank of Scotland is set to announce that it will put aside £500 million for swaps mis-selling, up from £50 million.

Banks: Soaring bills to repay armies of mis-sold customers could mean they seek more capital from shareholders

Lloyds is expected to set aside a similar sum, while Barclays could double the £450 million it has already announced.
HSBC has made a provision of about £150 million, but it is expected to raise that figure in the next few days.

Critics of the banks have calculated that the total compensation bill for swaps mis-selling could hit as much as £10 billion.
Meanwhile, analysts at Espirito Santo investment bank have calculated that the spiralling cost of the separate PPI scandal could mean – on its most conservative estimate – that British banks will ‘need an extra £1.4 billion of provisions, almost entirely borne by Lloyds’.
Lloyds is already the biggest payer for PPI, with £5.3 billion set aside so far. But Espirito Santo said the total PPI bill for all banks could be £13.6 billion more than currently estimated.
Analysts warned that there was a chance that some banks would soon need to tap shareholders for more cash.
Lloyds and RBS – both substantially owned by the Government – would, in effect, be asking taxpayers for extra capital.