Barclays shares dip after £1bn PPI provision

Shares in Barclays were off around 1% in early trading after it abandoned its legal challenge against PPI mis-selling and set aside £1bn to cover customer redress and administration costs.

Barclays said it will not attempt to appeal against the High Court judgment last month which dismissed the action brought by the British Bankers' Association (BBA) regarding the assessment and redress of PPI complaints.

Its decision comes two days after Lloyds said it will pull out of legal action. Royal Bank of Scotland and HSBC will now be left to fight on alone.

In reaction shares were down 2.55p or 0.92%, at 275.05p.

Barclays CEO Bob Diamond said in a statement: "We have taken this decision because it is in the best interests of our customers, as well as for Barclays and its shareholders; creating certainty, particularly regarding past issues, is of benefit to all parties.

"We don't always get things right for our customers; when we get them wrong, we apologise and put them right. That's our commitment to our customers, and it applies to the way in which we will deal with PPI complaints."

Last week, Lloyds' new chief executive, Antonio Horta-Osorio, said he no longer wanted to be involved in a battle with the FSA over the matter.

The bank, more than 40% owned by the Government, increased the amount it put aside to pay victims of the mis-selling to £3.2bn.

The move by Barclays will come as a significant blow to the BBA, which must decide by tomorrow whether to appeal a decision by Mr Justice Ouseley, who dismissed its original case against the FSA.

It argued the FSA and the Financial Ombudsman Service had retrospectively changed the rules on selling PPI, which set a dangerous precedent.

The FSA was this weekend thought to be involved in talks with the remaining banks to try to reach a settlement, the Telegraph reports.