Lloyds PPI Costs Hit £9.8bn as it Eyes Summer 2014 TSB Share Sale

Lloyds Banking Group's chief António Horta-Osório has tried to quell concerns over payment protection insurance claims after the bank set aside another £1.8bn to compensate customers that were mis-sold the product.

While banks have so far set aside just over £16bn ($25bn, €18bn), to deal with the most expensive consumer scandal in British history, Lloyds' total PPI bill now stands at £9.8bn.

PPI was originally designed to provide loan repayment cover, should the customer fall ill, lose their job or have an accident.

However, millions of customers complained after saying that they never wanted or needed the policy in the first place.

Lloyds' leader said that, despite the industry's fear that the total amount could hit a staggering £20bn, he does not see the bank's total compensation amount of £9.8bn will rise any further.

He did, however, add that "risks remain."

Lloyds' partly-state owned rival, the Royal Bank of Scotland, revealed on 27 January, that it has set aside a further £465m for PPI mis-selling claims against the bank.

The total provision for PPI claims against RBS is now £3.1bn.

Meanwhile, the Financial Ombudsman Service has revealed that it received 6,000 complaints about payment protection insurance each week during the third quarter of the financial year 2013/2014.

According to the group's latest set of data, Fos during October, November and December in 2013, it received a total of 107,267 new complaints about financial businesses, of which 79,578 were complaints about PPI.

Fos said that around 65% of PPI complaints during the third quarter were upheld.

Meanwhile, Horta-Osório and his right-hand man confirmed that the group is planning to sell TSB shares this summer as executives are well-prepared for the sale.

According to a statement by Horta-Osório, Lloyds is ready to sell TSB shares from the summer of 2014 onwards and is "ready to do whatever the government wants to do" on the sale.

"It is pretty well advanced. The prospectus is well in hand and progressing well," added finance director George Culmer.

Lloyds revealed only a week ago that it plans to a £1.5bn ( float of TSB after the government sold a 6% shareholding in the bank to financial institutions in September 2013.

Lloyds will sell between 30% to 50% of TSB, through a first tranche, to both institutional and retail investors.