RBS sets aside £125m to cover IT meltdown costs
03 August 2012 | 8256 views | 0
The Royal Bank of Scotland has set aside £125 million to cover costs resulting from the technology failure that hit RBS, NatWest and Ulster Bank customers in June.
Reporting a £1.5 billion second quarter loss, the 82% taxpayer-owned RBS posted the £125 million charge, most of which will be used to compensate customers hit by one of the biggest systems failures in banking history. More cost could still be recorded.
In late June a bungled software update at the bank saw a huge payments backlog develop, causing chaos for account holders at RBS and its subsidiaries NatWest and Ulster Bank. Customers' balances failed to update, leaving many unable to carry out transactions and pushing some into the red.
Call centre staff numbers were doubled and branches opened on Sundays for the first time in the bank's history to try and appease furious customers as the issues dragged on. Some NatWest and RBS accounts were not fixed for 10 days while Ulster Bank was still affected weeks after the incident hit.
RBS says that a full investigation - overseen by independent experts and reporting to the group board risk committee - is now under way into its operations and the role of third parties in the disaster, called a "significant blot on RBS's reputation" by chief executive Stephen Hester.
Says Hester: "We are working through a detailed root cause investigation to assess what improvements need to be made to ensure these types of issues do not re-occur. While we have significantly increased technology spend over the past three years, there is clearly more we need to do to ensure reliability for our customers. I know our customers expect and deserve better and we are determined to learn the lessons of this incident and make the necessary improvements."