London
20 °C
Manchester
Glasgow
21 °C
Dublin
Belfast
Washington
15 °C
Denver
17 °C
Atlanta
Dallas
23 °C
Houston Texas
New Orleans
24 °C
El Paso
Phoenix
Los Angeles
26 °C
28 °C
7 °C
Shares in UK banks jump after car loan court ruling / Photo: BEN STANSALL - AFP/File
NYSE - LSE
| RBGPF | 0% | 74.94 | $ | |
| CMSC | 0.09% | 22.87 | $ | |
| CMSD | 0.34% | 23.35 | $ | |
| BCC | -0.55% | 83.35 | $ | |
| NGG | 1.99% | 71.82 | $ | |
| SCU | 0% | 12.72 | $ | |
| SCS | -1.47% | 10.18 | $ | |
| RIO | -0.2% | 59.65 | $ | |
| BCE | 1.02% | 23.57 | $ | |
| GSK | 1.09% | 37.56 | $ | |
| JRI | -0.23% | 13.1 | $ | |
| RYCEF | 0.07% | 14.19 | $ | |
| RELX | -0.58% | 51.59 | $ | |
| AZN | 1.16% | 73.95 | $ | |
| VOD | 1.37% | 10.96 | $ | |
| BTI | 1.23% | 54.35 | $ | |
| BP | -1.26% | 31.75 | $ |
Shares in UK banks jump after car loan court ruling
Shares in British banks rose on Monday after the country's top court spared the sector from the worst of feared compensation claims over controversial car loans.
The Supreme Court, in a ruling on Friday after markets closed, largely overturned earlier judgements that had found it unlawful for car dealers to earn a commission on loans stretching back to 2007 in which borrowers had not been properly informed about the payments.
While the court upheld one of the three cases, it narrowed the overall grounds for claims, offering relief to banks that had been bracing for widespread payouts from millions of car buyers.
Shares in Lloyds Banking Group jumped seven percent and Barclays rose two percent in early trading on London's benchmark FTSE 100 index.
Close Brothers saw its stock surge more than 20 percent on the FTSE 250 after the court ruled in its favour in one of the cases reviewed.
The Supreme Court overturned rulings on two of the three cases but upheld one, based on specific circumstances -- including the high level of commission charged and the complexity of the contract involved.
Lloyds said on Monday the decision was unlikely to have an impact on the bank as it had already set aside nearly £1.2 billion ($1.6 billion) in preparation for the ruling.
Britain's financial watchdog said on Sunday it would consult on a redress scheme for affected consumers and warned banks could still face more than £9 billion ($12 billion) in compensation payments.
That figure, however, is far lower than the £44-billion bill expected by some analysts before the ruling.
The Financial Conduct Authority estimated most individuals will probably receive less than £950 in compensation.
In some cases, the loans -- available from 2007 to 2021 -- allowed car dealers to offer higher interest rates in return for a bigger commission from banks.
The ruling means that dealers have some leeway when arranging loans, without requiring explicit consent from borrowers for terms that may benefit lenders.
S.Urgo--INP
