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RBS 'to set aside additional $202m for PPI claims'

A major British bank is set to announce it has added a further £125 million ($202 million) to its budget to pay for payment protection insurance (PPI) claims.

State-owned financier Royal Bank of Scotland (RBS) will reveal this increase along with its first quarter results tomorrow (4 May), Sky News has reported.

This will take RBS's total budget for damages relating to the mis-selling of this product above the £1 billion mark and means that, in total, the firm and Lloyds - the country's other partly state-owned bank - will have spent around £5 billion on such claims.

Recently, Barclays announced it has also increased its fund for these payments and RBS's decision shows that lenders are reacting to the spike in the number of claims being launched by disgruntled consumers.

Furthermore, sources have indicated to Sky News that HSBC will make a "relatively modest" increase to its PPI budget in the near future.

By Claire Archer