Lloyds Banking group (LON:LLOY) has said that it will pay compensation payouts for victims of fraud caused by the former HBOS staff. The total hit to the group is expected to reach £100 million.
The bank already wrote off £250 million worth of loans in February, when two former HBOS employees were jailed. The further £100 million will be to compensate those who suffered from “economic losses, distress and inconvenience” during the scandal.
The £100 million compensation will cover “reasonable” fees for professional advice, personal debts owed to Lloyds and offer help to those in financial difficulty on a case-by-case basis.
The scam, which was carried out in HBOS Reading division, continued over five years before Lloyds took over the division in 2009 during the financial crisis. The fraud involved bribery with holidays, expensive watches and sex parties.
The Financial Conduct Authority is resuming its investigation into the scam after it was paused in 2013 at the request of Thames Valley police.
“The FCA’s investigation is focusing on the extent and nature of the knowledge of these matters within HBOS and its communications with the Financial Services Authority after the initial discovery of the misconduct,” the regulator said.
António Horta-Osório, Lloyds chief executive, said: “As I have stated before, we would like to express our deep regret and apologies to any customers directly affected by the criminal behaviour of these individuals.
“We are absolutely determined that victims of the crimes committed at HBOS Reading are fairly, swiftly and appropriately compensated.
“We take responsibility for putting right the wrongs that were committed at HBOS Reading at the time. That is why today we are providing an additional package of measures to ensure that customers have all the help they need as we resolve their cases as quickly as possible.”
Lloyds shares fell one percent on Friday morning to 62.98 pence.