Britain's Lloyds Banking Group said today it would likely need to set aside more cash to cover the cost of compensating motor finance customers, following the UK regulator's proposed redress scheme for the mis-selling scandal.
The UK bank, which is a major player in car finance, said the amount may be material.
It has already provisioned about £1.15 billion, the largest of any operator. Analysts at Citi and Jefferies said this week they expected Lloyds would need to increase that to £1.5 billion.
The Financial Conduct Authority said on Tuesday that the motor finance industry could pay about £11 billion to compensate consumers for mis-sold car loans.
The figure was lower than initially feared, and shares in Lloyds rose yesterday, along with other motor finance players including Barclays and Close Brothers .
"Uncertainties remain outstanding on the interpretation and implementation of the proposals but based on our initial analysis and the characteristics of the proposed scheme, an additional provision is likely to be required which may be material," Lloyds said.
It added that it continues to assess the implications of the market regulator's consultation paper.
