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TSB Banking Group

TSB's IT meltdown costs its Spanish owner €88mln in the third quarter

TSB’s owner, Banco Sabadell, said third quarter profits fell 37.4% to €127.2mln, largely due to the IT problems at TSB

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The botched IT upgrade led to an enquiry from the City regulator and the resignation of the bank's CEO last month

TSB’s (LON:TSB) IT meltdown earlier this year cost its owner, Banco Sabadell, €88mln in the third quarter, the Spanish financial services group said on Friday.

As many as 1.9mln TSB customers were left unable to access their own money in April, after the bank tried to introduce a new computer system, resulting in an enquiry from the City regulator and the resignation of the bank's chief executive Paul Pester last month.

READ: TSB saw over 20,000 customers ditch bank in second quarter in wake of IT meltdown, according to BACS data

TSB’s owner, Banco Sabadell, said third-quarter profits fell 37.4% to €127.2mln.

These costs followed an extraordinary charge of €203mln for the outage in the second quarter when TSB experienced a net loss of 16,641 current account customers.

The extraordinary costs related to the TSB outage included an increase in interest rates on its premium account, impacted commissions and fraud losses, the bank said.

TSB suffered further computer problems in September which could also bring further switching of customer accounts elsewhere. 

The embattled British bank's customer service has also come in for heavy criticism, with almost half of its customers rating the bank as ‘poor’.

The bank's former CEO Pester had been at the helm for seven years and oversaw the separation of TSB from Lloyds and its subsequent takeover by Spanish giant Santander in 2015.

The 54-year-old had previously resisted calls to quit in the wake of the IT failings but agreed to step down last month.

Chairman Richard Meddings will take on the role of chief executive until a permanent successor is found.

 

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