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TSB's bill for IT meltdown could reach ?229m as pressure mounts on chief executive

Thefull cost of TSBs IT fiasco could spiral to as much as ?229m, piling further pressure on under-fire boss Paul Pester.
Analysts at RBC have pencilled in a further ?53m of costs from its tech blunder in the coming months, on top of an eye-watering ?176m hit that it was forced to take during the first half of the year.
A bill of that size would comfortably dwarf its pre-tax profits of ?163m last year.
RBC said that TSB would be plagued by the continuing cost of consultants to help it handle the fallout including tech giant IBM and accountant Deloitte and the outlay for hiking interest rates on accounts in an effort to retain customers.
Other expected costs include paying salaries for the extra staff that have been drafted in to handle compensation claims, and an expected regulatory fine forecast to be around ?18m.
TSB's bill for IT meltdown could reach ?229m as pressure mounts on chief executive

TSB chief Paul Pester

Credit:
Nick Ansell/PA Wire
Separately, it has emerged that TSBs board voted unanimously to approve the bungled system switch in the days before it went live in April, while boasting members had extensive City and IT experience.
Non-executive directors include Stephen Page, a former global managing director of IT effectiveness at consulting giant Accenture, and ex-senior RBS banker Graeme Hardie, who led the post-acquisition change programme for NatWest according to his biography on the TSB website.
Nicky Morgan, chairman of the Treasury select committee, told The Sunday Telegraph that TSBs review of the fiasco should incorporate scrutiny of the boards decision and what they knew about the systems readiness.
The issue of how the IT switch was planned and approved is key to understanding what went wrong, she said.
TSB's bill for IT meltdown could reach ?229m as pressure mounts on chief executive

Nicky Morgan, chair of the Treasury committee

Credit:
John Nguyen/JNVisuals
It has got to include the board decision and how the non-executives performed their role of scrutinising theexecutives.
A senior banker at a rival lender questioned whether the non-execs should have applied more pressure on TSB bosses, including Mr Pester, to ensure the system was safe enough to proceed. Given the pressure that was undoubtedly coming from [Spanish parent] Sabadell, the non-execs had a crucial role to play, the source said.
A source close to TSB insisted that non-executive board members were advised by independent IT experts.
A TSB spokesman said: We have reviewed the governance approach followed by TSBs board to arrive at the decision to migrate and believe that it was robust.
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