UK bank TSB, a subsidiary of Sabadell, has been fined £48.65 million (€55.75 million) for failing to migrate its IT platform in 2018 which left nearly 2 million of its customers without access to own accounts, UK regulators said on Tuesday.
The computer upgrade “suffered technical problems,” the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) said, resulting in a “significant disruption” to TSB’s in-person, online and telephone banking services.
Regulators concluded that TSB did not adequately organize and control the migration, nor did it manage the operational risks arising from IT outsourcing.
Sabadell said it’s a statement that the deal would be accounted for by TSB in the fourth quarter and would have an impact of 6 points on the group’s capital.
The impact on capital is estimated at six basis points, which will be neutralized by the insurance policies taken out
However, he says TSB and Sabadell’s insurance policies will offset the impact in subsequent quarters.
Sabadell’s £1.7bn takeover of TSB in 2015 ran into problems more than four years ago, when IT problems sent costs skyrocketing.
“The rulings in this case have been widespread and severe, having a real impact on the daily lives of a significant portion of TSB’s clients, including vulnerable ones,” said Mark Steward, FCA’s executive director of enforcement and market monitoring .
TSB has been fined £29.75m by the FCA and £18.9m by the PRA, receiving a 30% discount for agreeing to a resolution of the matter, UK authorities said.
In a statement, TSB CEO Robin Bulloch apologized to consumers affected by issues during the update.
“We worked hard to solve our customers’ problems and have since transformed our business,” he said. “Over the past four years, we have leveraged our technology to deliver new products and better services to TSB customers.”
The result of an investigation published in 2019 revealed that a computer failure at TSB bank that disrupted services for nearly 2 million customers and halved profits at parent company Sabadell the previous year was caused by the switch to a new platform bank account before it had been properly tested.
The sanction ends the uncertainty that has surrounded TSB in the past and which has also forced Sabadell to freeze the sale of its British unit until it turns the business around.
In the third quarter, TSB already contributed positively to the parent group’s results for the seventh consecutive quarter, adding 39 million euros ($41.4 million).
