Technical glitch in RBS causes £125 million loss
The Royal Bank of Scotland (RBS) faced a significant IT failure in 2012, causing a disruption that came with a hefty price tag. The bank's half-year financial results, revealed today, provide some insights into the costs associated with the incident.
The immediate software issue was promptly identified and rectified by RBS. However, the exact breakdown of costs incurred during Q2 and Q3 of 2012, including compensations, business disruption, and investigations, remains largely unspecified in publicly available information.
The majority of the loss came from compensating customers affected by the glitch. RBS reported a total loss of £1.5 billion in the first half of 2012, with an estimated £125 million attributed directly to the IT failure.
No customer data was lost or destroyed during the incident, a relief for those impacted by the disruption. The bank's CEO, Stephen Hester, acknowledged the glitch as a "significant blot" on RBS's reputation. In response, Hester forfeited his bonus for the year due to the IT failure.
The glitch was triggered by a failed update to RBS's batch processing software CA7. Significant manual intervention was required due to the incident, leading to a backlog of daily data and information processing.
The IT failure also impacted RBS's subsidiary, Ulster Bank, causing extended problems with customer accounts. These issues have now been largely rectified.
In addition to the IT glitch costs, RBS has set aside £135 million for compensation for customers who were mis-sold payment protection insurance. The bank has also allocated £50 million for compensation for small businesses who were mis-sold products to protect them against interest rate fluctuations.
Despite increasing technology spend over the past three years, RBS has cut over 1,000 IT jobs. RBS is currently conducting a "full and detailed investigation" into the causes of the IT glitch to prevent such incidents in the future.
It is worth noting that the exact figures for the costs associated with the IT glitch in Q2 and Q3 of 2012, broken down by compensations, business disruption, and investigations, may be found in RBS’s official financial reports or regulatory filings from 2012-2013 or in investigative reports published at that time. However, these detailed financial data were not widely published in exact detail in the current search.
As always, it is crucial for RBS to maintain transparency and provide accurate information to its stakeholders, including the public, to regain trust and move forward from this significant setback.
