PPI mis-selling to cost Santander £540 million

Chief executive Ana Botin says the £538 million charge hit the bank's financial results in the six months to June, but still hails its "strong track record of profitability".

The hit comes after the High Court decided that new rules on the mis-selling of PPI could be applied retrospectively and the British Bankers' Association pulled an appeal against the decision.

Santander was the only major bank not to obstruct consumer claims pending the result of that case. The others have since re-opened cases.

Santander is the latest bank to reveal its PPI charge after Lloyds Banking Group made a provision of £3.2 billion, Royal Bank of Scotland set aside £850 million, Barclays £1 billion and HSBC earmarked £270 million (see the Banks lift PPI hold news story).

The British arm of the Spanish banking giant saw pre-tax profits dip 3% to £1.2 billion in the six months to June as higher regulatory costs dented earnings.

Profits after tax and the PPI charge were £300 million.