TSB said on Thursday it would cancel overdraft fees and interest charges for its retail and small business customers to compensate for the bank’s IT meltdown.
In a bid to prevent customers from jumping ship, the bank will also increase the interest rate on its main current account from 3% to 5%. The higher rate offer will be extended to new customers.
TSB estimated it will cost £10mln to waive the fees and charges, and another £30mln a year if all of the ‘Classic Plus’ current account customers take up the higher interest rate offer.
The move comes after an upgrade to its online banking system over the weekend led to a data breach that allowed some customers to see other people’s accounts. Others were unable to access their accounts and make payments.
Customers were still reporting problems on Thursday and the bank warned that the issues may not be fully fixed until next week.
TSB calls in 'calvary' IBM to resolve issues
TSB, which is owned by Spain’s Sabadell, has drafted in experts from IBM to help resolve the IT meltdown that has left up to 1.9 million customers locked out of their accounts for almost a week.
The bank’s chief executive, Paul Pester, said he was “calling in the calvary to get this thing fixed”.
The problems began on Friday when TSB began migrating five million customer accounts from the online banking platform of former owner Lloyds Banking Group PLC (LON:LLOY) to a new platform managed by Sabadell.
READ: TSB boss apologises for IT meltdown after Treasury Select Committee demands answers
In Sabadell’s first quarter results on Thursday, the company reported an additional €77mln in expenses related to the IT upgrade.
The new operating system was expected to save TSB about £100mln a year in costs.
Pester apologised again for the chaos but did not say if he would give up a proposed £1.6mln bonus.