RBS could face a £1billion bill for flogging ‘rip


of Scotland could face a 1billion bill for fl

ogging ‘rip-off’ credit insurance, experts said yesterday. The prediction came 24 hours after Lloyds set aside 3.2bn to compensate customers mis-sold

Payment Protection Insurance (PPI). RBS, which owns NatWest, claimed it was unable to put a precise figure on its liability but chief executive Stephen Hester admitted it could hav

e a “material” impact on the bank’s finances. City analysts estimated it had sold around a third as many of the controversial policies as Lloyds. PPI was designed to protect people who fell ill or lost their jobs leaving them unable to repay their debts. “It was not the industry’s finest hour,” Hester said. But he declined to say if RBS would follow Lloyds’ lead and abandon the challenge to a High Court ruling forcing the ban

ks to contact every customer sold PPI to see if they were mis-sold. The PPI scandal dominated discussions as RBS revealed it had slumped 116m into the red during the first quarter of the year compared with a 5m loss in the same period last year. The group, whic

h has axed 27,000 jobs since the start of the crisis, was hit by 1.3bn of losses at Ulster Bank. But Hester pointed out that profits from the “core businesses” – which will remain once he has completed his five-year restructuring - rose 25% to 2.1billion. This was enough to d

rive the shares up nearly 6%, although taxpayers are still sitting on a 7billion paper loss on the government’s shareholding in

the bailed-out bank.