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TSB slumps to annual loss after spending £330mln on IT meltdown

TSB executives will forgo their bonuses for 2018 in what the bank described as its "most challenging year"
TSB
TSB lost about 80,000 customers last year

TSB slumped to a full-year loss after taking a £330mln hit related to the bank’s computer systems meltdown.

The bank, owned by Spain’s Banco de Sabadell, reported a statutory loss before tax for 2018 of £105.4mln, compared to a profit of £162.7mln the prior year.

TSB lost about 80,000 customers last year after about 1.9 million people were locked out of their accounts for weeks.

READ: Spanish lender Sabadell plans to sell IT crisis-hit TSB after turnaround

The systems crashed when TSB tried to switch from a platform with former owner Lloyds Banking Group PLC (LON:LLOY) over to a new one created by Sabadell in April.

TSB said it had resolved about 90% of the 204,000 customer complaints since the IT meltdown. More than 20,000 complaints remain unresolved.

The cost of customer compensation has reached £125mln while the bank also had to spend £49.1mln to deal with fraud and £122mln to hire new staff to handle complaints. It also suffered £33.5mln in foregone fees in a bid to retain customers.

"Last year was TSB's most challenging year. But we enter 2019 with a renewed ambition to re-emerge as the leading challenger bank in the UK - firmly on the side of the customer,” said TSB chairman Richard Meddings.

TSB executives will forgo their bonuses for 2018 but staff received a bonus of £1,500 each before Christmas to reward them for handling the IT chaos. 

Last month Sabadell revealed that it plans to eventually merge or sell its TSB business.  Sabadell’s chairman Josep Oliu said once the group returns TSB to profitability it would look at its options for the UK bank.

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