The compensation payments that banks have had to make for payment protection insurance mis-selling have proven far bigger than initially thought. When Lloyds Banking Group first set aside £3.2 billion to settle PPI compensation costs in 2011, it stunned the banking industry, which believed the figure was an absurd overreaction. As it turned out, Lloyds was £15 billion short and counting.
Yesterday CYBG was the latest bank to warn that it faces more PPI costs. The owner of Clydesdale and Yorkshire banks was spun out of National Australia Bank two years ago and is now a member of the FTSE 250. There are more than 70 Clydesdale branches and 90 Yorkshire branches in Britain.
When CYBG was spun off, its Australian parent company left an