TSB boss Pester to step down as IT chaos rumbles on

Paul Pester will step down as chief executive of TSB Banking Group in the wake of the bank's major IT failings.

Customers were initially left without access to online banking features in April and have since been consistently facing online and mobile banking issues, with TSB issuing its latest apology on Monday following a weekend of disruption.

The fiasco cost the company £176.4m and drove a half-year loss according to figures released by TSB in July.

Pester served as chief executive for seven years and steered the bank through its launch and separation from Lloyds in 2011 and its acquisition by Sabadell Group in 2015.

It was the Barcelona-headquartered parent company that pushed the button on the IT upgrade as part of its “digitisation strategy”, with subsidiary Sabadell Information Services, known as Sabis, outsourcing the IT integration contract to Germany's GFT Technologies and giving US group First Data the contract to provide payment processing services, with responsibility for migrating TSB credit and debit card portfolios. After the IT collapse, IBM was hired to help fix the problem, warning that the problems could be prolonged and questioning the quality of the testing before the transfer went ahead.

"The last few months have been challenging for everyone at TSB," Pester said. "However, I want to thank all my colleagues across TSB for their dedication and commitment during this period and for their focus on putting things right for TSB customers."

Nicky Morgan MP, chair of the treasury committee said that Pester had set the tone for the bank's "complacent and misleading public communications" and that it was right that he should step down.

"The committee remains concerned about the continuing problems at TSB, including unacceptable delays in compensating customers who have been badly let down. It is to be hoped that Dr Pester’s successor is able to restore the confidence of the bank’s long-suffering customers," said Morgan.

To that end, TSB non-executive chairman Richard Meddings will now take on the role of executive chairman in order to commence a full search for a new chief executive.

"Although there is more to do to achieve full stability for customers, the bank’s IT systems and services are much improved since the IT migration. Paul and the board have therefore agreed that this is the right time to appoint a new CEO for TSB," said Meddings.