IT meltdown pushes TSB to £105m loss

Theresa May suggested austerity was coming to an end last year- but new figures challenge that assertion

Theresa May suggested austerity was coming to an end last year- but new figures challenge that assertion

The IT debacle that left thousands of TSB customers unable to use their accounts for weeks has led to a £105 million loss at the bank.

The Bank later admitted that 1,300 customers lost money as a result of fraud during the failures.

Chief executive Paul Pester stepped down in the wake of the fiasco.

Mr Pester is due to be paid £801,030 this year in severance for loss of office. He...

Much of the pressure at the bank has been on lower-level staff as call centres and branches were swamped with these complaints, and in August, it hired 250 extra customer service reps to deal with them.

The bank also saw 80,000 customers switch their accounts away from TSB past year, and received 204,000 customer complaints, although it said around 90 percent of those (181,000) had now been resolved.

It was also hit with £33.5m relating to waived fees as a result of the service disruption.

TSB's outgoings in the year included some £417.3m spent on "preparing" for the failed migration, which it had hoped would save it about £160m a year, given it was paying Lloyds £200m a year for hosting.

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Around 80,000 customers switched their bank account away from TSB in 2018 with volumes peaking in Q2; this compares with around 50,000 customers switching their account away from TSB in 2017.

In total, TSB has recognised post-migration costs, including customer compensation, additional resources, fraud and foregone income of £330.2 million, partially offset by the provisional recovery of £153.0 million from TSB's IT provider, Sabis.

TSB executive chairman Richard Meddings said: "Last year was TSB's most challenging year". Sabadell's chairman Josep Oliu said once the group returns TSB to profitability it would look at its options for the United Kingdom bank. Sabadell bought TSB in 2015 for £1.7bn.

TSB commissioned a report into the migration by law firm Slaughter and May, which is expected in the coming weeks, but it also faces the threat of a large fine from the Financial Conduct Authority, the City regulator, which is now investigating TSB's handling of the debacle.

The FCA has previously given out large fines to banks whose IT outages have inconvenienced customers, most notably the £56m fine given to Royal Bank of Scotland (RBS) in 2014 under similar circumstances.

TSB is aiming to move on from the disaster. He will be related by Debbie Crosbie in the spring.

TSB was named in December as part of the Incentivised Switching Scheme, part of the RBS bail-out package created to boost comopetition in the business banking market.

City analysts had judged TSB to be a frontrunner for the awards of up to £120m per bank, which are hoped to improve the market for small business banking.

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