Troubled RBS bank hit by severe computer glitch

AFP News

25 June 2012 at 10:48 am

People walk past a branch of the Royal Bank of Scotland (RBS) in central London, 2011. State-rescued Royal Bank of Scotland was battling to repair an already battered reputation as it struggled to fix a week-old computer glitch that has affected millions of customers

A Natwest branch in London. The Royal Bank of Scotland, Ulster Bank and NatWest were to take the unusual move of opening 1,200 branches on Sunday after a computer glitch hit millions of customers

The Ulster Bank headquarters in Belfast, Northern Ireland, 2009. State-rescued Royal Bank of Scotland battled to repair an already battered reputation as it struggled to fix a week-old computer glitch that has affected millions of customers

State-rescued Royal Bank of Scotland battled Monday to repair an already battered reputation as it struggled to fix a week-old computer glitch that has affected millions of customers. Faced with a huge backlog of unprocessed transactions, RBS said "1,200 branches" across Britain would stay open longer than usual up until late on Friday. Problems with the bank's payment processing software left customers at the bank and at RBS-owned lenders NatWest and Ulster Bank unable to pay bills, access accounts and receive wages. "We're making progress in putting things right," RBS said in a statement issued on Monday, while customers vented their anger on social networking sites. "We have arranged for our customers to be advanced cash in our branches when they were missing payments and had no available funds," the bank added. RBS chief executive Stephen Hester meanwhile insisted that a corner had been turned in the bank's attempt to sort out the mess, adding that senior executives would face "proper accountability" over the fiasco. "We're well on the road to recovery. Fingers crossed all the bugs have been got out but we feel a corner has been turned," Hester told Sky News television. An RBS spokesman had already said that a "large majority" of the three lenders' combined 15 million personal banking customers had been affected by the IT meltdown. In a separate statement on Monday, NatWest apologised for causing "an unacceptable level of inconvenience." Ulster Bank, which serves clients in Northern Ireland, said on its website that about 80 branches would have extended opening hours. "We recognise this is an unacceptable inconvenience and we want to reassure our customers that if they experience bank charges as a result of this issue they will be refunded. Once again we would like to unreservedly apologise," Ulster Bank added. Hester had issued a public apology on Saturday and admitted that customers had been let down. Despite the banks' moves, some customers were unforgiving. "Goodbye NatWest, from a customer of 25 years' standing," read one comment posted Monday on Twitter. Parent group RBS is 82-percent owned by the British government after a massive bailout in the wake of the global financial crisis. But it is still struggling to repair itself and last month posted a first quarter net loss of Â£1.52 billion (1.87 billion euros, $2.46 billion), almost three times the amount posted a year earlier. Amid public anger over a raft of poor results, Hester waived his latest annual bonus of shares worth Â£963,000, which had been due on top of his Â£1.2 million salary for his work in 2011. RBS last week meanwhile said it planned to axe 618 jobs at its department offering financial advice to customers, on top of 35,000 posts axed by the group since the 2008 financial crisis. "Unfortunately for RBS the damage is irreparable for the customers that they will lose as a result (of the glitch) and the problems will only feed anti-banking rhetoric further," said Simon Denham, head of Capital Spreads trading group. Investec bank analyst Ian Gordon said the fiasco could cost RBS dearly. "I would estimate that the cost could run into the tens of millions of pounds," he said. "If you ask about the reputation damage, that is harder," to estimate. RBS shares were down 3.29 percent at 235.3 pence on London's benchmark FTSE 100 index, which showed a drop of 1.36 percent at 5,438.58 points in late deals.