Lloyds sets aside £1.5bn compensation

Lloyds, Britain’s biggest retail bank, has set aside another £1.5bn (€1.7bn) to compensate customers mis-sold loan insurance, hitting its shares and tempering prospects for a swift sale of the government’s stake.

The British state wants to sell its 39% shareholding, which it acquired from bailing out Lloyds during the 2008 financial crisis, as soon as possible — ideally before the next election in 2015.

Shares in Lloyds have had a strong run, up by 44% in the last 12 months, as chief executive Antonio Horta-Osorio impressed investors by cutting the bank’s loan book and costs more quickly than expected and reining in bad debts.