RBS IT glitch will cost bank £125m

By Sooraj Shah
03 Aug 2012 View Comments

The IT glitch that affected NatWest, Ulster Bank and Royal Bank of Scotland (RBS) will cost the RBS Group £125m, the firm has revealed.

In its half-year report, RBS said that it had to provision £125m for "costs arising from the technology incident in June 2012". The incident left millions of customers unable to access their accounts, while RBS struggled to fix the issue.

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Overall the bank announced a loss of £1.5bn compared to a £794m loss a year ago.

In the report, group chief executive Stephen Hester said the IT failures had left a "significant blot" on RBS's reputation.

"We are working through a detailed root cause investigation to assess what improvements need to be made to ensure these types of issues do not re-occur. 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.

"I know our customers expect and deserve better and we are determined to learn the lessons of this incident and make the necessary improvements," he said.

The fact that the IT failure occurred might be indicative of continuing financial pressure on the business and the "hollowing-out" of the IT skills and experience, according to Andrew Sinclair, head of risk management at Onyx Group.

Sinclair urged RBS to come forward with more information regarding the failures to ensure that similar incidents do not occur again

"In order to regain some of the confidence and trust they have lost [from consumers] they need to be more open about the root cause of the failure. Only if they share information will we all be able to learn from them," he said.

After widespread reports about the glitch, Computing reported that the problem had been affecting customers a week before RBS's acknowledgement. While a former RBS IT manager wrote exclusively for Computing and suggested what could have caused the problems that affected millions of customers.

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