TSB TSB computer meltdown bill rises to £330m
Despite adverse publicity challenger bank still signed up 60,000 new customers
The cost of TSB’s computer systems meltdown rose to £330m during 2018, pushing the high street challenger bank to a large loss for the year.
No bonuses will be paid to TSB executives for 2018, the bank said, as it reported a statutory loss before tax for 2018 of £105.4m, against a profit of £162.7m in 2017. Staff received a bonus of £1,500 each before Christmas to reward them for handling the fallout from the meltdown.
The bank, which is owned by Spain’s Banco de Sabadell, suffered a torrid 2018 as it tried to migrate its customers from former owner Lloyds Banking Group on to a new system. The botched move in April resulted in up to 1.9 million customers being locked out of current accounts for weeks. Paul Pester, TSB’s chief executive, eventually resigned in September amid intense criticism from regulators and MPs.
More than 20,000 customer complaints remain unresolved, from the 204,000-plus received since the migration. TSB said it had received four times more complaints than otherwise expected, although complaints have returned closer to pre-migration levels even as IT issues have continued.
The bill for customer compensation has reached £125m, while the bank suffered £49.1m in fraud. It also had to spend £122m to hire new staff to handle the deluge of complaints, as well as £33.5m in foregone fees in a bid to retain customers.
Yet TSB still managed to grow to 5 million customers over the year. About 140,000 people opened a new bank account or switched their account to TSB, compared with about 80,000 who moved away.
TSB on Friday said the costs of the migration would be partially offset by the provisional recovery of £153m in compensation from its Sabadell-owned IT provider, Sabis, amid reports of tensions with the parent company.
TSB is aiming to move on from the disaster. It appointed a new chief executive, Debbie Crosbie, in November, who will join from CYBG in the spring, TSB said.
Richard Meddings, the TSB executive chairman, said: “Last year was TSB’s most challenging year.”
Meddings also said the bank was planning to make a “significant move into business banking”, as it bids for part of £425m in grants that the Royal Bank of Scotland was forced to pay out to address competition concerns.
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