Banks shares plunge after Lloyds' £3.2bn PPI bill

Banking shares led the FTSE 100 lower late morning after Lloyds Banking Group revealed it had set aside £3.2bn to compensate customers for missold payment protection insurance.

The admission by Lloyds - followed by confirmation the bank is pulling out of the judicial review launched by the British Bankers' Association (BBA) to challenge the FSA's ruling on PPI redress - weighed on the banking sector. Shares in Lloyds were down nearly 9% or 5.14p, at 52.88p by 11:20, while peers were also lower as investors grew concerned other banks may follow in Lloyds' footsteps. RBS was off 4.7% or 1.95p, at 39.75p, while Barclays was down 1.3% at 280p, and HSBC shed 0.71% to fall to 647.2p. Earlier this morning Lloyds said in its Q1 update it had excluded £3.2bn from ...