TSB boss Paul Pester faces losing out on millions of pounds in bonus pay as the high street challenger bank counts costs of more than £100m from its botched computer system migration.
Thousands of customers have been left without access to their bank accounts online for days since the bank tried to move to a new system. It had previously been using systems provided by former owner Lloyds, before it was snapped up by Spanish bank Sabadell in 2015.
TSB will waive all overdraft fees and interest charges for April at a cost of £10m, it announced today.
Meanwhile, an increase in interest offered on accounts from three per cent to five per cent in a bid to retain customers could cost up to £30m, based on a maximum £30 in extra interest payments this year to around a million customers on its “Classic Plus” accounts.
First-quarter results from Sabadell today revealed a €71m (£62m) charge related to the delay in the migration, which was originally planned to take place in September last year. The migration itself is hoped to cut down IT costs by half, after the bank paid Lloyds £213m last year.
Added to that bill will be large fees to IBM, after the computing giant was brought in to try to fix the problem, plus a big compensation bill, after Pester promised “no one will be left out of pocket as a result of these issues”.
I want to reassure our customers that no one will be left out of pocket as a result of these issues. If youre still experiencing issues please contact us via our website https://t.co/Ob2A6rrd5A
— Paul Pester (@PaulPester) April 26, 2018
Pester is eligible for a “Sabadell Integration Award” as part of his pay package. He received £2m in 2016 for the project, but his integration bonus for 2017 was “deferred” by the remuneration committee after the bank was forced to delay the move to the new system.
The chaos since the weekend caused by the migration will cast doubts on the chances of Pester receiving his bonuses for 2017 or 2018, after an embarrassing reputational blow.
TSB said no decision will be made on Pesters bonus until the remuneration committee next meets. The committee is headed by finance bigwig Dame Sandra Dawson; TSB declined to reveal when it will next meet.
Pester has received the backing of TSBs chairman, Richard Meddings.
Meddings said the board “fully supports the executive team as they continue to work around the clock to fix the problems that some of our customers are having in accessing their TSB accounts.
“Our focus right now is ensuring the stability of our digital channels for our customers.”
The chaos is not likely to affect the bonuses of other TSB staff, who are awarded a flat bonus of 12.5 per cent based on customer service targets.
Pester and other executive committee staff are also eligible for this award. Pester received £434,000 in variable pay in 2017 in total on top of his £1.3m fixed pay.