RBS IT Failure Cost Hits £175m

Another £50 million has been added to the £125 million bill for the RBS IT failure of June this year, which caused carnage for the bank’s customers, including those at subsidiaries NatWest and Ulster Bank.

In June, a fault in the CA7 batch process scheduler caused millions of customer accounts to freeze, preventing people from sending or receiving funds. RBS blamed the issue on human error, but many claimed the company’s extensive use of complicated legacy IT systems was a major contributing factor.

In August, the company warned of extra costs on top of the £125 million charge, saying they could “arise once all redress and business disruption items are clear”.

Costly RBS IT failure

The new costs have been attributed to customer compensation. RBS said in its note to investors today the extra £50 million cost in the third quarter was “primarily” associated with Ulster Bank.

But other parts of the business appear to have been hit by the incident. “In Q3 2012, gross new lending increased 3% compared with Q2, which was impacted by relationship managers efforts being diverted from lending due to the Group technology incident,” it read.

RBS also admitted to a “need to rebuild customer confidence following the group technology incident”.

Overall, the bank reported  a loss before tax of £1.2 billion.

What do you know about tech stocks and shares? Try our quiz!