By Marcus Leach
Santander UK has set aside over £500 million in order to cover costs relating to the mis-selling of payment protection insurance (PPI).
According to chief executive Ana Botin the money used for PPI payments had a considerable impact on the bank's six month financial results, although the bank's track record of profitability continued.
Pre-tax profits fell 3% to £1.2 billion for the first six months of 2011, whilst profits after tax and the PPI costs (£538 million) were £300 million.
Santander is not the first bank in the UK to announce the extent of costs for mis-selling PPI, with Lloyds setting aside £3.2 billion, Royal Bank of Scotland £850 million, Barclays £1 billion and HSBC £270 million.
"Financial results are, however, being adversely impacted by costs of liquidity, term funding and low interest rates," Miss Botin said.
"In line with other UK banks, a further provision for payment protection insurance remediation has also been made.
"Notwithstanding these factors, Santander UK has delivered profit in the first six months, maintaining its strong track record of profitability and strengthening its balance sheet."
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