Key events
Lloyds puts aside extra £800m for car finance scandal
Lauren Almeida
Lloyds Banking Group has put aside an extra £800m to deal with possible compensation claims over the motor finance scandal, taking its total provision to almost £2bn.
The bank, which is one of the most exposed to an ongoing scandal in which drivers were overcharged for loans as a result of commission paid to car dealers, had previously set aside £1.15bn to deal with potential costs.
However, it said an additional charge of £800m reflects an increased likelihood of more historical cases, particularly those affected by “discretionary commission arrangements”, being eligible for compensation.
The new estimate comes after the Financial Conduct Authority published a 360-page consultation paper for its redress scheme. The regulator said last week that the mis-selling scandal would cost banks £11bn overall, though it could rise to £12.4bn if all victims apply and secure payouts as part of the scheme.
Lloyds said the ultimate outcome may “evolve in response to representations made by various parties as well as further legal proceedings and complaints or any other broader implications fo the Supreme Court judgement”.
Introduction: Asian stocks tumble on fresh US-China trade spat; Chinese exports top forecasts
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Stock markets in Asia have tumbled, after the latest US tariff threat on China prompted Beijing to warn Washington of retaliation.
Hong Kong’s Hang Seng lost 2.3%, the Taiwanese market fell by 1.4% and the Thai exchange declined by 2%. In mainland China, the Shenzhen exchange fell by 1.4% and the Shanghai market slipped 0.4%. Japan’s Nikkei is closed.
Beijing has told the US it will retaliate if Donald Trump fails to back down on his threat to impose 100% tariffs on Chinese imports as investors brace for another bout of trade war turmoil.
China’s commerce ministry blamed Washington for raising trade tensions between the two countries after the US president announced on Friday that he would impose the additional tariffs on China’s exports to the US, along with new controls on critical software, by 1 November in a tit-for-tat, after China said it would restrict rare earth exports.
However, Trump and senior US administration officials opened a door to a China trade deal on Sunday when market futures showed another US stock market drop, but they have since bounced back and are now pointing to a higher open on Wall Street later. Trump wrote on Truth Social:
Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!
Despite the trade tensions, Chinese exports bounced back in September, topping forecasts after the world’s second-largest economy diversified its markets.
China’s exports rose by 8.3% year on year last month, according to customs data. This was the fastest growth since March, and beat a 6% increase forecast by economists polled by Reuters. It comes after a 4.4% increase in August.
Lynn Song, chief economist Greater China at ING, said:
China’s exports continued to beat forecasts in September, but the bigger surprise was the surge of imports to hit a 17-month high. This resilience shows that China has strengthened trade with the rest of the world amid US protectionism.
Chinese imports growth jumped to 7.4%, from 1.3% in August. This came as a surprise given the recent signs of relatively weak domestic demand.
Julian Evans-Pritchard, economist at Capital Economics, said:
While China’s economy has proven more resilient in the face of US tariffs than many had feared, there is still significant potential downside from a deeper rift with the US.
The Agenda
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Columbus Day in the US: stock markets open, bond markets shut
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11am BST: Nobel prize for economics
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