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Abu Dhabi, UAEWednesday 12 December 2018

TSB chief finally caves in amid UK bank's disastrous IT move

Paul Pester stepping down following huge banking system outage and widespread disruption for up to 1.9 million digital customers

British challenger bank TSB is set to search for a new CEO following Peter Pester's departure. Reuters
British challenger bank TSB is set to search for a new CEO following Peter Pester's departure. Reuters

Paul Pester, the chief executive of Britain's crisis-hit TSB Bank, is stepping down from his position, the lender said on Tuesday, after months of pressure following the lender's botched IT migration.

Mr Pester served seven years in charge of the challenger lender, but was heavily criticised for his handling of the integration of a new IT system in April that led to one of Britain's worst banking outages and widespread disruption to up to 1.9 million digital banking customers.

Richard Meddings, current non-executive chairman of TSB, which is owned by Spain's Sabadell, will take on the role of executive chairman with immediate effect while the bank looks for a new chief executive, TSB said.

Mr Meddings said that Mr Pester and the TSB board made the decision about his future together, and that it did not represent any individual responsibility for the IT crisis.

"He's not the fall guy ... This is a mutual agreement within the board," he said.

TSB's announcement came the day after online and mobile banking customers struggled to access their money again - the latest in a series of glitches since the bank was plunged into chaos for weeks following the IT migration.

Mr Meddings said the timing of Mr Pester's departure was a coincidence and that now was the right time for the CEO to stand aside, having led the effort to restore the bank's operations back to relatively good levels.

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He added that while the bank has good internal candidates it can consider for the role of CEO, it would also launch a search for external candidates. The process was likely to take a few months, he said.

Mr Pester, who has been put on garden leave, will receive £1.2 million (Dh5.6m) in fixed pay for his 12-month notice period and a £480,000 historic pay award that dates back to before TSB's acquisition by Sabadell in 2015.

FILE PHOTO: Chief Executive of TSB, Paul Pester, poses at the bank's Baker Street branch in London September 9, 2013. REUTERS/Andrew Winning/File Photo
Paul Pester will pocket almost £2m. Reuters

All of Mr Pester's variable compensation will be frozen and remains subject to performance criteria and the outcome of ongoing independent and regulatory investigations into the IT problems.

He had already waived his bonus following the outage earlier in the year.

The issues began when TSB tried to migrate its customer data from a system it was effectively renting from its former parent Lloyds Banking Group to one built by Sabadell's IT arm Sabis.

The move was supposed to save money, but has cost Sabadell more than $231m so far.