NatWest IT disaster to cost £125m

RBS has set aside £125m to cover the cost of its IT debacle in June, which left thousands of its 16.9 million accounts across RBS, NatWest and Ulster banks inaccessible to customers.

The IT systems failure, which stopped consumers from being able to pay bills or access their money, took nearly a week to resolve and was put down to problems with a software upgrade at an IT centre in Edinburgh.

RBS has set out a compensation deal stating that the bank will pay for affected individuals to receive a free credit report by agency Experian. Customers that incurred banking charges because of the systems failure will not be expected to pay, and customers from other banks who may have suffered "knock-on" costs will also be repaid.

RBS group chief executive Stephen Hester today called the incident a "significant blot on RBS' reputation", stating that the bank is working through a "detailed root cause investigation" to ensure the problem is not repeated.

He said: "While we have significantly increased technology spend over the past three years, there is clearly more we need to do to ensure reliability for our customers."

However, RBS has cut back on permanent IT staff in the past two years, as part of its 3,500 job cuts announced in 2010 as a result of its sale of branches to Santander.

The cull included workers in its back office, technology and property operations in a bid to save frontline, or "customer facing" staff.

RBS’s first half revenues fell 8% to £13.2bn, and its pre-tax loss nearly doubled to £1.5bn.

Hester said the first half results were in line with the same period last year however, before the £125m deduction and another £50m set aside for mis-selling interest rate swaps.

Hester said the Libor situation, in which RBS is being investigated over its part in the interest-rate rigging scandal, "is on our agenda", calling it a "stark reminder of the damage that individual wrongdoing and inadequate systems and controls can have in terms of financial and reputational impact".

Rival Barclays has already been fined £290m for its part in fixing the inter-bank lending rate, and last month issued press ads apologising to consumers for the affair, which resulted in the departure of chief executive Bob Diamond.


Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now


John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network
Branding guru Wally Olins dies aged 83
Duracell short film captures epic Transatlantic voyage
Ash runs Tinder experiment to show smokers are less desirable to opposite sex
British Airways teams up with Gerry Cottle Jnr for summer of rooftop film screenings
Arklu says 'girls can be superheroes too' with doll design competition
Coke enters squash market with Oasis Mighty Drops
Virgin Galactic signs up Land Rover as space flight sponsor
Motorola marketer Andrew Morley departs as Google gears up for sale to Lenovo
US Airways apologises after tweeting obscene image at a customer