Lawsuits and misconduct fines cost UK banks £53bn

Lawsuits and misconduct fines have cost Britain’s largest retail banks and customer-owned lenders almost £53 billion (€65.6bn) over the past 15 years, a new study has found.

The scale of the payouts has hampered banks’ efforts to rebuild capital, restricted the amount they are able to lend and reduced dividends for investors.

Britain’s banks have been hit by scandals ranging from the manipulation of foreign exchange and benchmark interest rates to the mis-selling of loan insurance and complex interest-rate hedging products.

While lenders have struggled to return money to shareholders because of the charges, they have continued to pay billions of pounds in bonuses to staff, the study by the think-tank New City Agenda said.

“The profitability of UK retail banks has been imperilled by persistent misconduct,” said John McFall, a director of New City Agenda and former Treasury Committee chairman.

“This has made every citizen poorer through our pension funds and our ownership of the bailed out banks,” Mr McFall said.

The report said the mis-selling of payment protection insurance alone cost banks at least £37.3bn in Britain’s costliest consumer scandal.

Lloyds Banking Group had to set aside £14bn to cover misconduct between 2010 and 2014, almost twice the amount of any other British lender, the report said.