20 February 2013

British banks face £9bn unfunded litigation bill

The four largest banks in Britain have racked up a legal bill of more than £9 billion due to pending legal action, a report yesterday revealed.

By James Barnes

Analysis from financial services company Credit Suisse found that the Royal Bank of Scotland has the largest unfunded bill at £3.5bn, with Barclays, HSBC and Lloyds adding £5.7bn between them.

Financial products

The Telegraph reports that the bill is largely due to compensation that has been paid out to customers because of mis-sold financial products.
In the case of RBS, the potential size of a settlement over its involvement in the sale of sub-prime US mortgages has also added to the cost.


Credit Suisse warned that their assessment may still underestimate the bill. 'We are only looking at issues that are known at present – there are likely to be issues in future that we are not aware of at this stage, but we have not tried to take these into account,’ said Credit Suisse.
The biggest concern looming over banks could come from the legal cases related to Libor-rigging, after Barclays and RBS settled with US and British authorities over their involvement.

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