TSB swung to a huge loss in the first half of the year, after the botched IT migration that impacted nearly 2 million customers cost the bank £176.4m.
The cost of its tech meltdown in April – accounting for customer compensation, foregone income and attempts to fix operating defects – meant that the bank racked up a £107.4m half-year loss, compared with pre-tax profits of £108.3m.
Up to 1.9 million people using TSB’s digital and mobile banking found themselves locked out of their bank accounts after it transferred customer data from the system of its former owner Lloyds’ to a new one managed by current owner Sabadell.
TSB was migrating from the platform of former owner Lloyds to that of new owner Sabadell
Branch services were affected too, with the bank’s failings drawing strong criticism from politicians, including those on the Treasury Select Committee who have been scathing in their condemnation and called for TSB boss Paul Pester, to be sacked.
TSB was given £318m by Lloyds after it extricated itself from its ex-parent’s platform, but that income was completely offset by the mammoth costs that ended up being involved.
The bank has put together a team of more than 260 people to ensure customers are compensated as quickly as possible, and Pester insisted today that the lender was making progress in resolving the service problems.
‘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.’
In the bank’s second quarter – the period during which the bulk of the disruptions took place – around 26,000 customers turned their backs on the beleaguered lender.
However, it attained 20,000 new customers, leaving it will a net loss of 6,000.
Boss Paul Pester (pictured) has faced pressure to stand down following the IT crash
Total customer lending rose 2.8 per cent to £31bn in the first half, but customer deposits fell 1.2 per cent year-on-year.
Current account deposits nudged up, but the bank said this was offset by a planned cut in savings as it changes the way it manages ISA deposit volumes.
‘Our priority in the second half of the year continues to be putting things right for our customers,’ Pester said.
‘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.’