The Lloyds Group 2011 quarter one Interim Management Statement shows that making a provision for payment protection insurance contact and redress has contributed £3.2 billion towards the total £3.47 billion in statutory losses they made over the period.

In the statement, the first under the stewardship of the new chief executive Antonio Horta-Osorio who recently took over from Eric Daniels, it says that the group has started discussions with the FSA with 'a view to seeking clarity around the detailed implementation of the FSA Policy Statement of 10 August 2010'.

The provision itself may not have been much of a surprise, but the amount is about double that which city analysts would expect.

After this the new chief executive said that the group would not be supporting any further moves by the British Bankers' Association (BBA) to try and get the FSA rules on PPI overturned subsequent to the BBA application being dismissed by the High Court on 20th April. "I don't want to continue a long-running dispute with our regulator" Mr Horta-Osorio said. He also said that making the provision now was the "sensible, prudent and the right thing to do", which would "draw a line under the issue".

Another surprise was was an inclusion in the impairment charge of £500 million"predominantly due to Ireland where we are now allowing for further potential falls in commercial real estate prices of approximately 10 per cent".

The group has though managed to reduce  their liquidity support from government and central bank facilities by £26.2 billion down to £70.4 billion, as well as increasing customer deposits by £6.8 billion. They gave also recorded a 2% year-on-year increase in lending to SMEs, which is in contrast to the rest of the industry according to Bank of England market statistics.

But while Lloyds has done what some say is the only decent thing yo do by acknowledging that the PPI battle is over, other large banks such as HSBC are reportedly still backing the BBA in its attempts to overturn the rules, which could cost them (their customers) billions.

But maybe the lead Lloyds has taken will make claiming for mis-sold PPI easier.

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