Feeds

RBS: June's tech enormo-cock-up cost us £125m

Hardly any of which went to any actual fixing of stuff

Boost IT visibility and business value

RBS's software upgrade blunder in June has cost the banking group £125m so far this year, with further costs expected. The bulk of that money was spent on compensating customers, with the cost of the actual technical fix "unlikely to cost a meaningful amount", according to group finance director Bruce Van Saun.

RBS also clocked up two other "one-off" costs in what has proved to be a heavy six months for the bank: with a £50m paid out to small businesses after RBS missold them insurance (interest rate swaps) and £135m set aside to compensate customers to whom it had missold payment protection insurance.

Introducing RBS's half-yearly financial results [PDF], CEO Stephen Hester said:

The first half of 2012 saw RBS make good progress on both of the jobs that make up our recovery plan. We have continued to make the bank safer and stronger as we clean up problems of the past.

RBS revealed the group made a pre-tax loss of £1.51bn in the past six months, on a revenue of £13.57bn.

The loss is almost double the loss the group made in same six months the year before - when it clocked a pre-tax loss of £790m after revenue of £15.90bn. Revenues have slipped 15 per cent since last year.

CEO Hester attempted to put a bright spin on the increasing losses by assigning some of them to "one-off items" and drawing attention to "broadly stable operating profit" over the past two quarters. One-offs aside, he said that underlying biz costs were down 3 per cent compared to last year. That was partly due to reducing staff headcount by 5,700.

Fixing the tech bit won't be expensive

Little of the £125m set aside in the Glitch Payout will be making its way into RBS's IT department. Most of the money went on "customer redress" – refunding late payment fines and compensating people who suffered disruption when their bank accounts seized up. More compensation claims are possible in the next three months, RBS's financial statement warned.

In an analyst's call on the results this morning, Van Saun said that he didn't expect redressing the actual technical flaw to cost much money. Citing early findings from RBS's investigation into the incident, he said:

I do think that the first findings show that it will not cost a meaningful amount to rectify this: We'll be simplifying the batches and tightening procedures a bit.

In response to an analyst's question about RBS's general investment in technology, Van Saun claimed that RBS has been putting money into its core systems for several years:

I should be clear that over the first 3.5 years of our recovery plan, we've increased tech spend quite significantly and we've increased spend on the infrastructure as well as the fancy new stuff.

®

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.