Regulatory fines may hurt British banks’ creditworthiness and earnings this year and next as they are forced to compensate customers, Standard & Poor’s said.
“Industrywide concerns on customer redress, management, and governance issues have come to the fore over the past six months and could undermine the banks’ progress so far toward more sustainable credit profiles,” S&P said in a statement. “The pace of recovery toward sustainable earnings growth is slower than we would anticipate.”
Banks have been hit by a series of scandals this year including mis-sold loan insurance and the sale to small businesses of interest swaps that later lost them money. Barclays Plc (BARC) and Royal Bank of Scotland Group Plc, have set aside at least 9 billion pounds ($14 billion) to redress customers.
HSBC Holdings Plc (HSBA) and Standard Chartered Plc (STAN) have agreed to set aside or pay more than $1 billion to U.S. regulators over lapses in their anti-money laundering controls, while Barclays paid a 290 million-pound fine for attempting to rig the London interbank offered rate
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