TSB swings to a £105.4m loss following IT meltdown

TSB suffered an IT meltdown in April 2018 Credit: PA

TSB has swung to a mammoth annual loss as it counted the cost of an IT meltdown last year which caused chaos for thousands of customers.

The high street lender posted a pre-tax loss of £105.4 million for 2018 compared with a profit of £162.7 million the year earlier.

The disastrous migration of its IT system cost the bank £330.2 million with higher charges related to customer compensation, additional resources and fraud.

Around 80,000 customers switched their bank account away from TSB in 2018 – 30,000 more than 2017. The lender currently has 3.8 million current account customers and over 5 million customers in total.

The bank said it had recovered £153 million from IT provider Sabis.

Paul Pester left the company following the IT failure. Credit: PA

TSB, owned by Spanish banking giant Sabadell, was stung by an IT crisis last April that left up to 1.9 million users of its digital and mobile banking locked out of their accounts.

The tech troubles were triggered by a migration of customer data from former owner Lloyds’ IT system to a new one managed by Sabadell.

Following the botched IT migration chief executive Paul Pester left the bank and is to be replaced by CYBG’s chief operating officer Debbie Crosbie in the spring.

TSB executive chairman Richard Meddings said: “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.”

Mr Meddings added: “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”.

TSB said it has resolved around 90% of 204,000 customer complaints since the IT meltdown and that it is seeing a lower volume of new complaints.

Customer deposits fell by 4.7% to £29.1 billion last year, which the company said was due to “a planned reduction in savings balances as a result of pricing decisions taken early last year to manage ISA deposit volumes.”

Customer lending also decreased by 2.7% to £30 billion.

TSB’s Common Equity Tier 1 capital ratio, a key measure of a bank’s financial strength, stood at 19.5%.

TSB flagged that economic and market conditions remain uncertain for a number of reasons, including Britain’s impending departure from the European Union.

But it maintained that it is “one of the most strongly capitalised banks in the UK and, with a healthy liquidity reserve, is well positioned to weather economic uncertainty or shocks”.