The UK's TSB racked up 105.4 million in pre-tax losses for 2018 as it paid the price for a chaotic IT meltdown which locked customers out of their accounts for several weeks.
In total, TSB has recognised post-migration costs, including customer compensation, additional resources, fraud and foregone income of £330.2 million, partially offset by the provisional recovery of £153.0 million from TSB’s IT provider, Sabis.
Around 80,000 customers switched their bank account away from TSB in 2018 with volumes peaking in Q2; this compares with around 50,000 customers switching their account away from TSB in 2017.
Almost two million of the bank's customers were locked out of the bank as a result of a badly botched migration to a new platform run by TSB's Spanish owner Banco Sabadell. The fiasco led to months of disruption for the bank's customers and ultimately cost chief Paul Pester his job
TSB says it has resolved around 90% (181,000) of the 204,000 customer complaints received since migration. The bank estimates approximately a quarter of this total would have been received in the usual course of business.
The bill for customer compensation reached £125m, while the bank suffered £49.1m in fraud. It also had to spend £122m to hire new staff to handle the huge volume of complaints, as well as £33.5m in foregone fees as it waived charges in a bid to retain customers.
Richard Meddings, TSB chairman, says: “Last year was TSB’s most challenging year. But we enter 2019 with renewed ambition to re-emerge as the leading challenger bank in the UK - firmly on the side of the customer. We have a truly customer-focused team, a strong banking system that customers are starting to see the benefits of, and look forward to our new CEO, Debbie Crosbie, joining us later this year."
He says that all critical and urgent IT fixes have been applied and "the majority" of products are available across all channels.
“Whilst the migration caused considerable difficulties, we’re now a stronger bank, operating on a more coherent and modern platform, and able to service more customers than ever before."
Medddings says that the bank is preparing to make a multi-million pound investment to move into the business banking market. TSB was named in December as part of the Incentivised Switching Scheme, part of the RBS bail-out package designed to boost comopetition in the business banking market.
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