* Expects to set aside an extra 1.2-1.8 bln stg in Q3
* Suspends 2019 share buyback, scraps 2019 ROTE target
* Shares fall more than 2%
(Adds detail, background, shares)
By Carolyn Cohn and Iain Withers
LONDON, Sept 9 (Reuters) - Lloyds Banking Group
will set aside up to an extra 1.8 billion pounds ($2.2 billion)
to settle mis-selling claims in Britain's costliest consumer
banking scandal, and said it was suspending its 2019 share
buyback programme.
Banks are putting aside more money to pay claims against
mis-sold payment protection insurance (PPI) following a rush of
consumer enquiries about compensation ahead of the deadline on
Aug. 29.
PPI policies were sold alongside a personal loan or mortgage
to cover repayments if borrowers fell ill or lost jobs, but many
were unsuitable.
The PPI saga has already cost lenders more than 36 billion
pounds in payouts, with analysts estimating the final bill could
top 50 billion pounds.
RBS said last week it faced additional costs of up
to 900 million pounds, while Clydesdale Bank made a fresh
300-450 million pound provision.
As Britain's biggest domestic lender, Lloyds has been the
most exposed to PPI and has already paid out more than 20
billion pounds.
Lloyds said on Monday it had received 600,0000-800,000
requests for information about PPI in August, well above its
expectations of around 190,000.
As a result, it expects to set aside a further 1.2-1.8
billion pounds in its third quarter results to cover payouts.
The bank's shares fell more than 2% in early trading.
Lloyds also said it had received a claim submitted by the
Insolvency Service's Official Receiver on behalf of bankrupt
consumers, pushing costs higher.
It added the charge would dent its profitability and
scrapped guidance for a return on tangible equity of around 12%
this year. It also warned the increase in its capital ratio in
2019 would be below its 170-200 basis points per annum guidance.
The lender made a PPI provision in its second quarter of 650
million pounds.
Lloyds had been expected to make a further provision
following its rivals' moves, with analysts at KBW saying they
had downgraded the bank last week partly due to the expected
charge. KBW said the top end of the charge at 1.8 billion was
marginally better than its worse case scenario.
Lloyds was given some breathing space on capital in May,
when regulators reduced its required core capital ratio to 12.5%
from 13%, equating to around 1 billion pounds.
Lloyds is continuing to target paying a dividend and said it
would make a decision on surplus capital at the end of the year.
($1 = 0.8154 pounds)
(Reporting by Carolyn Cohn and Iain Withers; Editing by Rachel
Armstrong and Mark Potter)
Barclays (BARC)
Lloyds (LLOY)
