Lloyds Banking Group PLC (LSE:LLOY) might be the worst affected of the major banks by the FCA’s clampdown on motor finance commissions, according to a couple of City firms.
Analysts at Barclays have analysed the comments from the regulator and believe that it raises the possibility of compensation being paid the banks.
While uncertainty is “high”, it suggests a potential provision range of £0.5-1.0 billion for Lloyds.
A similar number is estimated by the team at Royal Bank of Canada (TSX:RY), which estimates the issue at stake is worth around £300 billion overall.
According to the Canadian bank, the downside impact for the motor finance sector is around £2-8 billion.
“In this scenario, Lloyds could see the largest absolute impact at £1.2bn, however, Close Brothers could see the largest relative impact at c.120bps of capital.”
Shares in Lloyds fell 1.7% to 44.2p and Close Brothers by 2.2% to 644p.