LONDON, March 26, 2026, 14:21 GMT
Lloyds Banking Group shares dropped over 2% to about 93 pence in lagging London trade on Thursday, with investors eyeing the FCA’s March 30 update on hidden car loan commission payouts. UK stocks slid as well. 1
Timing is key here. The Financial Conduct Authority announced Tuesday it will unveil its stance after markets shut on Monday. Lloyds has racked up nearly 2.0 billion pounds in provisions for the looming charges. Barclays, Santander, and Close Brothers could take hits as well. 2
FTSE 100 slipped 1.1% early, with European bank shares also shedding close to 1% as rising oil prices and persistent inflation jitters fed rate concerns. “The duration of the conflict” and the prospects for “an off-ramp or a resolution” are front of mind for investors, said Craig Cameron, portfolio manager at Templeton Global Equity Group. 3
Lloyds didn’t slow down. On March 25, a filing revealed the bank scooped up 15.27 million ordinary shares at an average 95.2999 pence apiece, according to volume-weighted figures. The move fits within the buyback plan laid out January 30, which targets up to 1.75 billion pounds. 4
The buyback came after Lloyds posted a solid annual performance. Back in January, the bank logged a 12% jump in 2025 pretax profit, while also bumping its 2026 return on tangible equity goal past 16%. That metric tracks profit as a slice of shareholder capital, ignoring goodwill and other intangibles. CEO Charlie Nunn pointed to “business momentum and strategic delivery” as reasons for the higher guidance. 5
Rates are the wild card for Lloyds, the UK’s largest mortgage provider. Market bets have swung away from cuts, with traders now looking for two or three quarter-point hikes from the Bank of England before the year’s out. Still, a Reuters poll out Thursday found most economists sticking to forecasts for Bank Rate to stay put at 3.75% through 2026. “The risk of hikes has increased” if Middle East tensions drag on, said Gabriella Willis, UK economist at Santander CIB. 5
The rate move’s a double-edged sword: pricier loans may boost bank lending income, yet that pressure can hit households and slow demand. Bruna Skarica, Morgan Stanley’s chief UK economist, said she still doesn’t see the central bank “pivot to hiking as early as the market is currently pricing.” 6
The FCA formula remains the key risk factor here. According to industry sources speaking to Reuters, the draft plan for compensation takes a wider view of what counts as unfair lending, while also lowering the threshold for what’s considered an excessive commission. That combination could push Lloyds to set aside more than the nearly 2 billion pounds it’s already provisioned. This week, Bank of England policymaker Megan Greene flagged that energy and food prices probably won’t drop sharply anytime soon. The FCA’s statement on Monday might address the issue of lending, but Greene’s inflation worries look set to linger. 2
