TSB sinks to first-half loss in wake of IT fiasco

TSB has paid the price for an IT meltdown earlier this year after the bank swung to a half-year loss.

The bank has 155 branches across Scotland. Picture: John Devlin
The bank has 155 branches across Scotland. Picture: John Devlin

The lender, which has 155 branches across Scotland, posted a bottom-line pre-tax loss of £107.4 million for the six months to the end of June, compared with a profit of £108.3m a year earlier.

It was forced to take a £176.4m hit linked to its IT migration failures, accounting for customer compensation, foregone income after waiving fees and charges as a result of the service disruption, and the cost of trying to fix operating defects in the system.

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Chief executive Paul Pester said: “We’re making progress in resolving the service problems customers experienced following our IT migration and we will continue to work tirelessly until we have put things right.

“I know how frustrated many customers have been by what’s happened. It was not acceptable and was not the level of service that we pride ourselves on – nor was it what our customers have come to expect from TSB.

“It has been a difficult time for customers and I am grateful to them for their patience.”

He added: “Our priority in the second half of the year continues to be putting things right for our customers. Looking further ahead, we are determined to get back to bringing more competition to UK banking and ultimately making banking better for consumers and small businesses.”

Up to 1.9 million people using TSB’s digital and mobile banking found themselves locked out of their bank accounts following the migration of data on customers from former owner Lloyds’ IT system to a new one managed by current Spanish owner Banco Sabadell in April. Branch services were also impacted.

While some 20,000 customers opened a new bank account or switched their account to TSB in the second quarter – the period during which the bulk of the disruption occurred – about 26,000 switched away from the group, which has 11 branches and two offices in Edinburgh.

TSB stressed that its liquidity was robust while its capital position remains “one of the strongest of the UK banks”.