By Max Colchester and Alex MacDonald
LONDON--U.K. regulators on Thursday fined Royal Bank of Scotland
Group PLC (RBS) 56 million pounds ($87.8 million) for a 2012
computer failure that saw millions of customers unable to access
their accounts.
The U.K.'s Financial Conduct Authority fined RBS and two of its
subsidiaries, National Westminster Bank PLC, or NatWest, and Ulster
Bank Ltd. GBP42 million, while the Prudential Regulation Authority
fined the three banks GBP14 million. RBS said it has already
provisioned for the fine.
In 2012, RBS's payments systems failed after a routine upgrade
resulting in 6.5 million customers being unable to transfer money,
make payments or get accurate account balances for several weeks.
The FCA said this wasn't the result of RBS's failure to invest in
computers systems, rather the bank didn't have adequate testing
procedures in place for the software upgrades.
RBS said it has since spent an additional GBP750 million on its
computer infrastructure and payments-processing system. The bank
had already put aside GBP175 million to compensate customers
affected by the incident.
"Our IT failure in the summer of 2012 revealed unacceptable
weaknesses in our systems and caused significant stress for many of
our customers," said Philip Hampton, chairman of RBS. As I did back
then, I again want to apologize to all customers in the U.K. and
Ireland that we let down two and a half years ago."
Previous RBS Chief Executive Stephen Hester waived his 2012
bonus following the IT meltdown. On Thursday the bank also
disclosed it cut the bonus pool handed out to its technology
department by GBP6 million.
The 2012 computer meltdown was widely seen as a warning shot for
British banks who had failed to adequately overhaul their aging
technology. On Thursday regulators said they had been in touch with
the chairmen of other U.K. banks to ask what their boards were
doing to assess the risks of a serious technology failure.
"Modern banking depends on effective, reliable and resilient IT
systems," said Tracey McDermott, director of enforcement and
financial crime at the FCA. "The banks' failures meant millions of
customers were unable to carry out the banking transactions which
keep businesses and people's everyday lives moving."
The fine is the first ever meted out by the PRA, a regulator
whose job is to oversee financial stability rather than
conduct.
RBS's Irish unit, Ulster bank, had already been fined EUR3.5
million by the Irish central bank over the debacle.
Write to Max Colchester at max.colchester@wsj.com and Alex
MacDonald at alex.macdonald@wsj.com
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