Sabadell's U.K. TSB Chief Pester Exits After IT Meltdown
(Bloomberg) -- The chief executive officer of Banco de Sabadell SA’s British unit is leaving as the lender continues to struggle with the fallout of its technology breakdown earlier this year.
Paul Pester will step down after seven years with the U.K. arm, known as TSB Banking Group. Richard Meddings, the current non-executive chairman of TSB, temporarily takes on an executive role as it looks for a new CEO, TSB said on Tuesday. Meddings later insisted on a call with journalists that Pester “is not the fall guy” for the bank’s IT fiasco.
“This was a decision that’s been made jointly by the board” and was mutually agreed by both parties, Meddings said.
Pester has faced pressure from lawmakers to step down after the IT collapse left thousands of customers unable to access services at TSB, which was acquired by Sabadell in 2015. The Spanish bank was hit by a 203.1 million-euro ($235 million) charge related to the business in the second quarter. Pester has denied that the new IT platform was rolled out without adequate testing or that its Spanish parent company, which provided the system, put pressure on it to speed up the process.
‘More To Do’
Meddings said that Pester’s exit is unrelated to the IT issues and that “the state of the IT platform has stabilized largely.” There is “clearly more to do to achieve full stability” though “the overall level of service is much improved since April,” he said. On Monday, thousands of customers were unable to access their accounts online and TSB had to apologize again for issues related to the internet banking.
Pester will leave with fixed pay of about 1.2 million pounds ($1.5 million), while his variable pay will be dependent on the outcome of an authorities investigation. “Pester will be paid in line with his contract and in line with the remuneration policy,” Meddings said.
TSB’s attempt to upgrade systems for its 1.9 million online and mobile customers left hundreds of thousands unable to access their accounts, make payments, pay their staff or finalize their mortgages. As some problems continued and some 1,300 customers suffered fraud as a consequence, the Treasury Committee this year said Pester’s presence in the role risked damaging trust in the retail banking industry.
The problems began as the bank tried to switch 5 million customers and 1.3 billion records to software run by its Spain-based parent Sabadell from a system operated by Lloyds Banking Group Plc, which spun off TSB three years ago.
The search for a new CEO may take several months, according to Meddings. The lender has “good internal candidates” who could move “with confidence” within the IT system, but will also consider hiring externally, he added.
Pester’s departure comes after three senior executives including TSB’s Treasurer Ian Firth stepped down in August.
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