Ideal Business Consultants

THE UK arm of Santander said today that it had set aside more than half a billion pounds to cover the costs of mis-selling payment protection insurance to its customers.

Chief executive Ana Botin said the £538m charge hit the bank’s financial results in the six months to June, but still hailed its “strong track record of profitability”.

The British arm of the Spanish banking giant saw pre-tax profits dip 3% to £1.2bn in the six months to June as higher regulatory costs dented earnings. Profits after tax and the PPI charge were £300m.

The hit comes after the High Court decided that new rules on the mis-selling of PPI could be applied retrospectively and the British Bankers’ Association pulled an appeal against the decision.

Santander, which has its commercial banking base at Bootle’s Bridle Road, also had to make provisions to hold higher levels of liquidity after the banking industry collapse of 2008.

It said its UK holdings have increased by about £30bn over the past 18 months.

But it still managed to increase lending to customers in the six month period, including a 27% improvement in loans to small and medium-sized enterprises , which it said was beyond the ‘Project Merlin’ commitment to the Government on lending for businesses.

Total lending reached £4bn, including £2.1bn to SMEs.

Today’s statement said: “Santander UK has delivered robust performances across all business areas this year and we have taken some significant steps in our programme to improve customer service, including returning our overseas retail banking call centres to the UK.”

Its Bootle base increased staffing by 250 earlier this year in a prelude to the return of its call centres from India.

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