The cost to TSB of its disastrous computer meltdown last year has hit £330 million, it revealed on Friday, alongside annual accounts that show disgraced former chief executive Paul Pester will pocket another £800,000 this year.
That is money he is contractually owed, says chairman Richard Meddings, who admitted TSB had endured an “extremely challenging year” as he again apologised for “letting our customers down”.
An attempt to move TSB’s 5.5 million customers away from former parent Lloyds Banking Group’s IT infrastructure last April was a catastrophe. Clients were left in limbo, accounts were hacked and parliament became involved.
Slaughter & May is investigating the matter, with its report expected next month. Pester, a triathlete who had waxed lyrical about TSB’s power to shake up the banking sector, was paid £4 million in 2017.
He was paid notice of £438,000 after he was ousted in September and will get the £800,000 in 2019 unless he takes alternative work.
The computer crisis plunged TSB into a loss of £105 million for the year, compared with a profit of £163 million last time. It expects to recover £153 million from IT provider Sabis.
Some customers went weeks without banking services and 80,000 of them left. TSB claims to have resolved 90%, or 181,000, of the customer complaints it received.
Meddings, awaiting the arrival of new CEO Debbie Crosbie from CYBG, said no bonuses would be paid to executives for 2018. “If our performance is not good enough, we take the consequences,” he said. He insists the relationship with Spanish parent Sabadell remains strong.
TSB could yet face fines from regulators, but has not set aside cash for that. “We are not going to pre-empt the regulatory outcome,” said Meddings, who claims that the “TSB brand has recovered” from the chaos.
While customers do seem to still like the brand, deposits fell nearly 5% to £29 billion. Lending fell almost 3% to £30 billion.
TSB, which can trace its history back to 1810, has lately styled itself as a “challenger bank” that aims to offer its customers better deals and services than traditional lenders.
Pester admitted last April that the bank was “on its knees” over the computer chaos. Crosbie, who arrives in the spring, is regarded as a banking IT expert.
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