News | World News | TSB set to pay Spanish owner £110m a year for the botched IT upgrade

TSB set to pay Spanish owner £110m a year for the botched IT upgrade

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By James Burton For The Daily Mail

Published: 16:52 EDT, 11 June 2018 | Updated: 04:18 EDT, 12 June 2018

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TSB could be forced to pay its Spanish owners £110million a year for a botched IT upgrade which brought the bank to its knees.

The money will be due to Sabis, the digital arm of parent company Sabadell, for running a computer system that failed spectacularly when it was switched on – locking 1.9m customers out of their accounts.

TSB chief executive Paul Pester confirmed that Sabis owns the system’s physical infrastructure and the bank paid the Spanish division £110million a year to run the it.

The lender has already incurred costs of £124.5million because of the IT system, according to its 2017 annual report.

Insult to injury: TSB could be forced to pay its Spanish owners £110m a year the botched IT upgrade which brought the bank to its knees
Insult to injury: TSB could be forced to pay its Spanish owners £110m a year the botched IT upgrade which brought the bank to its knees

Insult to injury: TSB could be forced to pay its Spanish owners £110m a year the botched IT upgrade which brought the bank to its knees

The bill will ultimately be paid with revenue earned from UK customers.

Sabadell’s Spanish bosses have been accused of washing their hands of the British bank in the fall-out after the IT debacle. 

Officials including Sabadell chairman Josep Oliu and chief executive Jaime Guardiola Romojaro were caught by the Mail enjoying lavish hospitality and swigging Cava and beer at a tennis tournament in Barcelona less than week after the meltdown while millions of customers were still locked out of their accounts in the UK.

Campaigners yesterday insisted the lender – which has been dubbed Totally Shambolic Bank – should not pay as it could be seen as a reward for failure.

Labour MP Wes Streeting, a member of the Treasury Select Committee, said: ‘Given the enormous damage that has been done to TSB customers and their personal lives and businesses, it’s inconceivable that a single penny of their money should be given to Sabadell for this fiasco.’

The IT upgrade left TSB customers unable to pay bills.

UK boss could be fired within weeks  

Paul Pester is likely to face calls to go from TSB’s parent company Sabadell once a report into his handling of the IT meltdown is published.

MPs on the Treasury Select Committee have already called for Pester to go.

Sabadell bosses have remained tight lipped and the TSB board has given the 54-year-old chief executive its backing – so far.

But the report by law firm Slaughter and May into what went wrong could spell the end for Pester.

It is understood Sabadell bosses in Spain will move against Pester if the report blames him for the debacle.

Appearing before the Treasury Select Committee last week, he appeared to concede his days may be numbered.

Asked if he planned to resign, the banker said: ‘When we get to the end of this situation with the independent report, then of course we will take whatever action is necessary.’ 

It also knocked out critical systems at branches, leading to long queues as customers unable to get online also failed to get answers in person either.

Thousands of callers jammed TSB’s switchboard leaving it totally overwhelmed. It was not long before fraudsters launched one of the biggest attacks in banking history by pretending to be TSB staff who could help struggling customers if they shared their personal details. 

They managed to con more than 1,300 out of money – many of whom were stuck on hold with the bank while their life savings were stolen. When customers gave up and tried to switch banks, TSB wrongly registered 370 of them as dead.

Streeting asked Pester last week if TSB will be making a payment to Sabis for designing the IT system.

Pester said: ‘When we get to the bottom of that, the appropriate payments will be made.’

Miguel Montes, Sabadell’s chief operating officer and a member of the TSB board, said: ‘There has not been any kind of discussion about payments.’

 

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