More like this

Business

Giant bank IT cockup of 2012 'could have brought down ENTIRE financial system'

£56m fine for blundering RBS, Ulster and Natwest

RBS, Natwest and Ulster Bank have today been hit with a £56m fine from regulators for their IT meltdowns in 2012.

They received a £14m smack from the Bank of England's Prudential Regulation Authority and a £42m penalty from the FCA.

The PRA said the IT incident could have threatened the safety of the banks and "in extremis" the "stability of the financial system it interfered with". It said the provision of the banks’ core banking functions also affected third parties and risked disrupting the clearing system.

The IT incident, which began on 18 June 2012, affected at least 6.5 million customers in the UK. Disruption to the majority of RBS and Natwest systems lasted for weeks across the banks.

The cause of the IT incident was the failure of the banks to have the proper controls in place to identify and manage exposure to the IT risks within their business, says the regulator.

This is the first financial penalty the PRA has imposed since the body was created in April 2013. The Financial Conduct Authority (FCA) has separately fined the banks for the same incident.

Andrew Bailey, chief executive of the PRA, said:

“The severe disruption experienced by RBS, Natwest and Ulster Bank in June and July 2012 revealed a very poor legacy of IT resilience and inadequate management of IT risks.

"It is crucial that RBS, Natwest and Ulster Bank fix the underlying problems that have been identified to avoid threatening the safety and soundness of the banks.”

RBS has agreed to reimburse customers in England and Wales £175m for any loss suffered as a result of the incident in 2012.

Last week RBS-owned Ulster Bank received a €3.5m (£2.75m) fine for the IT failure by the Central Bank of Ireland. ®

Sponsored: Magic quadrant for enterprise mobility management suites