UK banks’ £14.6bn legal costs account for over half of FTSE 100 litigation liabilities

January 24, 2018

Research published by Thomson Reuters this week shows that the UK’s four biggest banks’ litigation and regulatory provisions make up over half of the FTSE 100’s litigation costs.


The research showed that overall the FTSE 100 set aside £26.2bn during 2016 to tackle litigation and regulatory investigation expenses (including fines), with £14.6bn of that figure being spent exclusively by the four biggest banks in the UK: Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland (RBS). However this is down on 2015, when FTSE 100 litigation provisions hit a record £31.1bn, with money set aside by banks also hitting a record £17.3bn.


According to the statistics, oil and gas producers accounted for 19% of the FTSE 100 total, at a cost of over £5bn. However the biggest rise in contribution came from the pharmaceutical sector, where there was a 63% jump – from £612m in 2015 to £1bn in 2016.


HSF disputes partner James Baily, who represents oil and gas industry clients, said: ‘There are a number of issues that have forced oil and gas companies to assess their position and potential risk. There has been a growing trend in litigation in relation to upstream oil and gas projects, and there are also new issues coming forward such as class actions arising out of climate change. It’s a US phenomenon, but English courts have been open to accepting jurisdiction on some of these claims.’


Baily also argued that the fall in oil prices has meant that certain projects have been put on hold, which also gives rise to more litigation.


Thomson Reuters’ research echoes that done by City firm RPC in April 2017. Figures published by the firm revealed a marked 37% increase in litigation against the largest 50 global banks in 2017, with the rates rising year on year. According to the research, the big four UK banks also made up 67% of 784 High Court cases involving the global top 50 in 2016.

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