The British banks seem to find company in misery as the latest set of lawsuits against the U.K.’s Big Four in relation to the mis-selling of derivative products to small businesses is just another example of the major legal headaches facing these banks.  This recently announced multi-billion dollar scandal comes within months of the banks’ settling their dues in the Payment Protection Insurance (PPI) mis-selling scandal. It looks like The Royal Bank of Scotland (RBS) Group (NYSE:RBS), Barclays (NYSE:BCS), Lloyds (NYSE:LYG) and HSBC (NYSE:HBC) have another round of answering to do in court.
In April 2011, the four British banks settled their PPI lawsuits with customers that alleged that the banks had mis-sold them PPIs worth billions since 1998.
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This time around, it is the small- and medium-sized businesses that have raised voices against the banks, claiming that the banks sold them complex interest rate derivatives without explaining the risks associated. The banks allegedly pocketed billions of dollars in cash at their expense.
As of now, all the banks are maintaining that they are “satisfied” with their sales. Ironically, a glance at the statements made by all the banks in response to the issue sound and read almost alike. And for those who have been tracking the developments in the PPI related lawsuits, the banks sounded confident and “satisfied” on that occasion too.
From the looks of it, there could be another major settlement due for these banks very soon. Not a very pleasant thought at a time when they are already grappling with business in poor economic conditions. But then, what goes around, comes around.Notes: