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TSB blames IT disaster for huge losses

TSB made a huge loss in its latest financial year because of costs it incurred as a result of an IT disaster

TSB said its huge losses last year were the result of costs resulting from problems caused by its botched IT migration.

In 2018, the bank lost £105.4m, compared with a profit of £162.7m the previous year.

In its annual report, TSB said this reflected “the impact of the issues following the bank’s IT migration.”

It said the problems cost the bank a total of £330m, which included compensating customers, additional resources, fraud and foregone income.

The size of the losses related to the IT problems was not unexpected. In its report for the first half of 2018, TSB set aside £176m to cover costs related to customer compensation and extra advisory services from companies such as IBM and Deloitte.

The IT problems started in April, when TSB moved millions of customer accounts from the Lloyds Banking Group IT system that hosted them to a new banking platform, known as Proteo4UK, from TSB’s Spanish parent Sabadell. Proteo4UK is an in-house banking platform based on Sabadell’s Proteo system.

Problems included customers being locked out of their accounts, others reporting money disappearing from online accounts, and some were even able to see other customers’ accounts.

Read more about the TSB IT migration disaster

Proteo4UK was implemented to support TSB in the digital banking age and enable it to challenge bigger banks by offering fintech services such as some of its digital challengers.

The bank’s former CEO Paul Pester stepped down after seven years in the role in the wake of the IT disaster.

Richard Meddings, TSB’s executive chairman, said: “While 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.”

The TSB problems were on such a scale, affecting that it became headline news quickly. As a result of the public outrage, parliament got involved through select committee hearings on the disaster.

The financial services regulator is looking at bringing in new rules to link banker bonuses with operational resilience.

Read more on IT for financial services

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Should you be able to tell us if a Cyber Risk coverage has cover this financial disaster? Was there any one?
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