Barclays is to take a 1 billion pound ($1.64 billion) provision to cover compensation for people who were mis-sold certain insurance policies, the British bank said on Monday.

Barclays and the country's other banks will also drop a planned appeal against an earlier court ruling which had made them liable to the compensation claims over the mis-selling of payment protection insurance (PPI).

"In the interest of providing certainty for their customers, the banks and the British Bankers' Association (BBA) have decided that they do not intend to appeal," the BBA said in a statement.

Barclays said it would make a 1 billion pound provision in the second quarter of 2011 to cover the cost of "future redress and administration" related to PPI mis-selling.

The hit to Barclays comes a week after rival Lloyds unveiled a shock 3.2 billion-pound charge to cover compensation.

These insurance policies were typically taken out alongside a personal loan or mortgage to cover repayments if customers fell ill or lost their jobs.

But the policies were mis-sold, to self-employed or unemployed people who would not have been able to claim, and to consumers who did not realize they were taking out a policy, and last month a court ruled that the banks were at fault.