Lloyds Banking Group has been hit by more than 300 million pounds of suspected fraud linked to Covid-19 pandemic-era recovery loans for small businesses, the highest among big bank peers, according to government data.
British banks have classified total some 1.1 billion pounds worth of the emergency lending scheme known as "bounce back" loans as fraud, the data published by Britain's Department for Business, Energy and Industry (BEIS) showed.
Lloyds is the worst hit among big banks by net amount, and also saw a higher ratio of likely fraud with some 3.6% of its 8.5 billion pounds of bounce back loans categorised as under suspicion, according to a calculation from the data.
A Lloyds spokesperson said its rate of suspected fraud was lower than the 7.5% average estimated by the scheme's administrator the British Business Bank, adding, where fraud has been identified, we have acted promptly and have already recovered the majority of these funds without calling on the guarantee and we will continue to attempt to do so even after a claim has been submitted.”
The other banks said the differing levels could partly reflect some lenders having more sophisticated fraud detection measures, as well as different thresholds for classifying a loan as suspect.
The levels of fraudulent loans at the lenders are not final and are subject to change. Under the scheme rules, the government is responsible for the fraud costs if banks can prove they administered the scheme correctly. Smaller online lenders were hit disproportionately hard by suspected fraud, with two classing as many as around one in four of their bounce back loans as potential scams.