UK banks paid almost £53 bn in misconduct fines since 2000
13 April 2016
The UK's largest retail banks and customer-owned lenders have racked up almost £53 billion in lawsuits and misconduct fines over the past 15 years, according to a new study.
Due to the sheer scale of the payouts, banks' efforts to rebuild capital had taken a hit. It had also limited the amount they were able to lend, besides reducing dividends for investors.
The banks had been plagued by scandals ranging from manipulation of foreign exchange and benchmark interest rates to the mis-selling of loan insurance and complex interest-rate hedging products.
However, even as lenders had struggled to return money to shareholders because of the charges, staff had continued to draw billions of pounds in bonuses, according to the study by the independent think-tank New City Agenda.
"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, Reuters reported.
"This has made every citizen poorer through our pension funds and our ownership of the bailed out banks."
According to the report, the mis-selling of payment protection insurance had alone cost the lenders at least £37.3 billion in the UK's costliest consumer scandal.
"Persistent misbehaviour'' by the lenders had cost them about £1 pound in every £4 of pretax profits earned, the study said.
According to the report, between 2000 and November 2014, UK retail banks had earmarked over £38.5 billion towards compensation to customers.
Earlier in March, the UK's banking regulators passed a law that held senior managers responsible for any wrong doing on their watch in a measure aimed to curb fiscal mismanagement by senior employees. With the reform, reckless management of a bank, leading to its failure became a criminal offence.